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Timely launches of large residential projects in the second half of FY27 will be crucial for listed real estate developers to turn strong housing demand into higher pre-sales, according to a research report by Equirus.
The brokerage said the sector's growth will depend on faster approval clearances, timely project launches, sales momentum and inventory absorption, while developers continue to maintain disciplined supply. Pre-sales of listed developers fell 26 per cent year-on-year (YoY) and 33 per cent quarter-on-quarter (QoQ) to Rs 366 billion in the first quarter of FY27. The decline was mainly due to weak performance by DLF and Prestige Estates. Excluding these two companies, pre-sales grew 12 per cent YoY, though they declined 31 per cent QoQ. Equirus said the moderation was largely due to limited new project launches rather than weak demand. Sales were mainly driven by existing inventory, with buyers continuing to show interest in projects from established developers. Aggregate sales volumes declined 9 per cent YoY and 21 per cent QoQ to 24.6 million square feet. Excluding Prestige Estates, sales volumes increased 6 per cent YoY. New launches also remained subdued. Aggregate launch area fell 20 per cent YoY and 32 per cent QoQ to 38.1 million square feet. Developers launched projects with a gross development value (GDV) of Rs 439 billion, which was only 17 per cent of their revised FY27 launch-GDV target of Rs 2.6 trillion. However, Equirus said the lower launch activity was mainly due to delays in approvals and planned project phasing, rather than project cancellations or a broad slowdown in demand. Several large projects are expected to be launched in the second half of FY27. Their timely launch will therefore be important for improving sales growth in the coming quarters. Collections also improved significantly during the quarter. Collection efficiency rose to 75 per cent in the first quarter of FY27 from 49 per cent a year earlier and 65 per cent in the previous quarter. The improvement was supported by construction progress and the conversion of earlier bookings into payment milestones. Equirus said residential demand remains structurally strong, although the exceptional growth seen after the Covid-19 pandemic is gradually normalising. End-user demand remains firm across major markets, while premium and luxury housing, larger homes and branded residences continue to attract buyers. The brokerage expects disciplined supply, premiumisation and measured price increases to support growth in housing values. It also said the moderating market could lead to further consolidation, benefiting large and well-capitalised developers with strong brands, execution capabilities and access to redevelopment and joint-development opportunities. (ANI)
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