Real estate pre-sales in India are estimated to grow by 30 per cent year-on-year (Y-o-Y) in 2023-24 (FY24), driven by sustenance sales as launches were subdued for most companies, according to a Motilal Oswal report.
Twelve listed real estate companies registered their second-best quarter ever, with cumulative pre-sales of Rs 252 billion, up 54 per cent Y-o-Y and 44 per cent quarter-on-quarter. Ongoing projects contributed 56 per cent to total pre-sales in the first half (H1) of FY24. At the same time, new launches reported a 60 per cent absorption, contributing to 44 per cent of pre-sales, according to Motilal Oswal.
Typically, ‘pre-sales’ is a term used by developers to indicate that a certain amount of inventory has been booked in a given period, but only a part of the payment has been received. Pre-sales provide visibility to the company’s future cash flows and collections and act as critical inputs for developers to strategies and time their new product launches.
With inventory for the listed universe under Motilal Oswal now down to 10 months, launches are expected to double in the second half of FY24 to 60 million square feet (msf) in value terms, and launches would catapult to Rs 820 billion from Rs 260 billion during the same period.
Over 2019-20 through 2022-23, the listed players have outperformed industry growth in terms of bookings by 1.5 times, resulting in a consistent increase in their market share to 16 per cent from 12 per cent (this stood at 16.5 per cent at the end of H1FY24). During this period, sales across the top seven cities recorded a 22 per cent compound annual growth rate, with Delhi-National Capital Region, Pune, and Hyderabad witnessing a twofold jump in sales since the pandemic.
Most of the listed real estate players have a very strong launch pipeline targeting at least two new markets apart from their home market, which will lead to a further pick-up in market share of listed peers, said Motilal Oswal.
Since the rate hike cycle has peaked, it believes the residential real estate cycle is unlikely to
