IGI Logo

Residential Real estate is witnessing a goldilocks situation where launches are highly calibrated, and demand is at its best resulting in inventory overhang in the system falling to the lowest level in the last 15years for Top 7 cities (Tier-I cities) covered by the PropEquity. For Jan-24, cumulatively Top 7 cities witnessed launch of 25734 units and absorbed 47595 units, resulting in inventory overhang months falling below 11months. Average price realization continued to inch up and recorded 5.1% Y/Y growth for Jan-24. Contribution of western cities i.e. MMR (Mumbai Metropolitan Region) & Pune cumulatively to the launches for the top 7 cities was 52% and similarly absorption was 57%. Hyderabad, in recent years witnessed an increased contribution to the top 7 cities is now coming down. For launches, from a peak of 26% has come down to 22% while for absorption, deceleration is slower i.e. peak contribution of 19% falls to 18%.

City-wise demand supply trend

? Mumbai Metropolitan Region: MMR witnessed 9522 units launch in the month of Jan-24 and clocked 18609 units resulting in inventory overhang falling to 12 months (lowest in 15years). Average prices also moved up by 5.2% Y/Y, highest growth in the last 10 quarters.

? National Capital Region (NCR): On Jan-24 NCR saw 1556units launched and absorbed 2637 units. For Jan-24 inventory overhang moved slightly to 10months from the Q3FY24 exit of 11months. NCR average price realization growth was strong at 14.4% Y/Y but it lowest in the last 6 quarters.

? Bengaluru: City witnessed 3685unit launches and absorption was at 5706 units on Jan-24. With higher demand over launches, inventory overhang months is lowest in top 7 cities to below 8months. Additionally, pricing also recorded 13.8% Y/Y growth in Jan-24.

? Pune: City achieved absorption of 8719 units and 3828 units launched in Jan-24 resulting in inventory overhang falling below 8months (same as Bengaluru). Prices moved up by 7.1% Y/Y for Jan-24.

? Hyderabad: Due to recent increase in demand in Hyderabad for many quarters launches were higher than absorption resulting in inventory being highest at 14months in top 7 cities. But with the strong demand scenario the city achieved 8592 units while launches were 5642 units. Prices growth has decelerated for the city with Jan-24 clocking just 4.1% Y/Y.

? Chennai: City witnessed 992 units launches and absorption of 1469 units for Jan24. Inventory overhang months was steady at 12months, and prices inched up by 4.9% Y/Y in Jan-24.

? Kolkata: Smallest of the market in top 7 cities achieved 1863units sales while launches were at 509units for Jan-24. Inventory overhang was at 13months, and prices were up by 4.5% Y/Y in Jan-24.

Our View:

We believe residential segment demand to continue for next 2-3years guided by the calibrated launches and strong inherent demand. Additionally, consolidation is expected to play a bigger role wherein the overall market might grow at a slower rate while top developers will see strong demand for their products due to differentiated/innovative product, timely delivery, and quality construction. We remain structurally positive on the residential segment; we are upbeat on ARVSMART & SRIN from the coverage universe.

Please refer disclaimer at https://yesinvest.in/privacy_policy_disclaimers
SEBI Registration number is INZ000185632