Driven by strong demand, the Indian residential real estate sector has experienced a surge, with the pre-sale for the top 15 developers reporting an increase at a compound annual growth rate (CAGR) of 43 per cent from FY21 to FY24, totalling ₹1.2 trillion, according to the Axis Capital Report.
The remarkable growth is due to the increasing absorption rates and a strategic focus on launching new projects in established and emerging areas. The report highlighted that between FY21 and FY24, developers prioritised scaling their operations in established markets, significantly contributing to the sector’s expansion. Notably, around 80 per cent of this growth originated from existing markets, boasting a 36 per cent CAGR. The top seven cities have seen solid demand, with a remarkable 41 per cent rise in property value. The document added that as the momentum of demand continues, developers across the region intensify their presence in the established markets while tagging future developments in other markets.
Prominent developers, such as DLF, Oberoi, and Sunteck reportedly witnessed advancing contributions from the new projects in their established markets, particularly in the National Capital Region (NCR) and Mumbai Metropolitan Region (MMR). Meanwhile, other developers, including LODHA and Prestige Estates, ventured further into their core cities like Pune, Bengaluru and MMR. The report stressed that introducing the Real Estate (Regulation and Development) Act (RERA) had played a crucial role in aiding developers in successfully expanding into new markets. Leading firms have invested outside their core markets, with estimates suggesting an addition of about 130 million sq. ft of new projects valued at ₹1.75 trillion from FY22 to FY24.
Even though there has been a slight dip in absorption rates lately due to the rise in premium and luxury housing options, the overall demand for residential properties remains stable. Diverse offerings and the improved reputation of branded developers in the market support this stability. The absorption rates are anticipated to be stabilised with the increased supply, fueling further growth in the sector. The report indicated that from FY24 to FY26, the residential real estate sector is expected to achieve a compound annual growth rate (CAGR) of 24 per cent in pre-sales. Since 2020, the developer’s participation has surged by 29 per cent, especially in the MMR and Hyderabad markets, although some areas like NCR & Bengaluru have witnessed a slim drop.
Record transaction volumes across the top seven metros are being recorded, with MMR, Pune, and Hyderabad showing absorption rates significantly higher than their previous peaks. As supply constraints ease, cities like NCR’s Noida, Bengaluru and Chennai are anticipated to see new projects emerge. The residential real estate sector will witness significant growth, suggesting an increase of 5 per cent to 10 per cent in the coming years.
