Indian Real Estate Market Hits Record High in FY24
The Indian residential real estate market had its best-ever performance in FY24, with a 20.1% increase in the area absorbed compared to the previous year, according to a report by JM Financial. This surge in demand was accompanied by an 11.5% increase in supply, yet inventory levels in major cities fell to a record low of 12 months, indicating a tight market driven by sustained demand.
The sector saw an average price increase of 9.0%, contributing to an overall market growth of approximately 29% during the fiscal year. Pre-sales for listed companies, especially Tier 1 developers, saw a 39.5% increase, highlighting their growing market share and the preference for branded and high-end products.
Bengaluru’s Strong Performance
Bengaluru’s residential market was among the top performers, continuing its robust growth since FY21. In FY24, the city recorded an 18.1% increase in sales, with 102.7 million square feet (MSF) absorbed against 95.9 MSF launched. The demand for residential properties in Bengaluru has consistently outpaced supply, resulting in an 8.3% reduction in unsold inventory, which stood at 75.1 MSF by the end of FY24. Residential property prices in the city have grown at a compound annual growth rate (CAGR) of approximately 10.7% over FY20-24.
Other Major Cities
The National Capital Region (NCR) experienced a slight decline in residential sales in the fourth quarter of FY24, with absorption down by 10.2% year-on-year. However, the region still recorded a healthy 10.9% increase in sales for the entire fiscal year, with 79.4 MSF sold.
The Mumbai Metropolitan Region (MMR) displayed strong momentum, with a 20.4% increase in sales for FY24, despite a 3.5% decline in new launches. Residential prices in MMR have seen a CAGR of 7.7% over FY20-24, supported by steady demand, particularly in the premium segment.
Hyderabad’s residential market continued to thrive, with sales up by 28.0% in FY24, driven by a 20.0% increase in the fourth quarter alone. The city’s growing appeal as a destination for lifestyle upgrades has fueled demand, although supply has also grown, leading to an increase in unsold inventory.
Conversely, Chennai saw a decline in sales by 9.5% in the fourth quarter of FY24, despite a significant 50.0% increase in launches. The market recorded a 7.9% increase in sales for FY24, with property prices rising at a CAGR of 7.4% over FY20-24.
Future Outlook
With inventory levels at historic lows, rising disposable incomes, and limited expansion in supply, the residential real estate sector is poised for continued growth in FY25. Propequity forecasts an 18% market growth, comprising a 12% increase in volume and a 6% escalation in prices. While supply is expected to grow moderately, inventory levels are likely to remain healthy due to strong absorption rates.
Doubts Revealed
FY24 -: FY24 stands for Fiscal Year 2024. A fiscal year is a one-year period that companies and governments use for financial reporting and budgeting. In India, it usually starts on April 1 and ends on March 31 of the next year.
Real Estate Market -: The real estate market refers to buying, selling, and renting properties like houses, apartments, and land. It’s where people and companies trade properties.
Bengaluru -: Bengaluru, also known as Bangalore, is a major city in India. It’s famous for being the country’s tech hub, with many IT companies and startups.
Mumbai -: Mumbai is the financial capital of India. It’s a big city known for its bustling economy, Bollywood film industry, and being home to many large businesses.
Area absorbed -: Area absorbed means the total space or area of real estate that has been sold or rented out during a specific period.
Supply -: Supply in real estate refers to the number of new properties available for sale or rent. It includes newly built homes and apartments.
Inventory -: Inventory in real estate means the total number of unsold or available properties in the market. Low inventory means fewer properties are available for buyers.
Rising incomes -: Rising incomes mean that people are earning more money. When incomes go up, people can afford to buy more expensive things, like houses.
Market growth forecasted -: Market growth forecasted means experts predict that the real estate market will continue to grow in the future. They use data and trends to make these predictions.