Q3 FY25 for home developers: Flat pre-sale growth, strong revenue expected

Demand remains strong and developers expected to make launches, according to analysts

Developers building homes are estimated to post yearly growth in pre-sales but strong revenues in the third quarter of the financial year (Q3 FY25). Pre-sales have moderated amid delays in approval for projects, particularly for Bengaluru-based realtors.

 

Residential project launches in the top eight Indian cities declined by 33 per cent, while sales plunged by 26 per cent year-on-year in Q3 FY25, according to real estate consultant PropTiger. Average property prices in major Indian cities grew by almost 13 per cent, according to PropEquity, another consultant.

 

For Q3 FY25, analysts at HDFC Securities estimate an average annual growth of 20 per cent in residential pre-sales of top listed developers, though Bengaluru-based Sobha has reported a decline of 29 per cent. Its peer, Prestige Estates, too, is estimated to witness a decline in pre-sales.

 

In Q3 FY24, India's residential real estate had recorded a new peak with pre-sales of 301 million square feet (msf), up 26 per cent year-on-year (Y-o-Y) and 16 per cent quarter-on-quarter. Pre-sales crossed the previous peak of 259 msf in Q2 FY24, according to Kotak Institutional Equities.

 

In terms of adjusted revenues for Q3 FY25, according to Bloomberg estimates, the top six listed real estate majors may grow 9 per cent to over 200 per cent, with Godrej Properties leading the chart.

 

Godrej has new projects in the national capital region (NCR), Pune, and Kolkata and it is expanding work in Wadala and Kandiwali in the Mumbai Metropolitan Region (MMR), according to JM Financial.

 

The second half of the financial year (H2 FY25) is seasonally stronger for cash collections for developers and the balance sheet is strong for listed companies after raising capital, according to the analysts at JP Morgan.

 

“Demand has remained strong across the industry over FY23 and FY24, and also through H1 FY25, despite strong upward movement in prices, thus building up a high base. Considering this high base and price levels, we expect bookings are likely to remain flat Y-o-Y," said Vikas Anand, associate director at India Ratings & Research. "Collections may remain strong due to high sales in the last two years, as the execution of these last two-year launches gathers pace.”

 

Oberoi and DLF are expected to improve pre-sales in Q3 FY25 on the back of luxury projects: DLF Dahlias at Golf Course Road in Gurugram, Haryana, and Oberoi Garden City in Thane, Maharashtra.

 

Analysts say the real estate sector may witness a large number of launches in Q4 FY25 with the approval challenges being over and inventory of most of the listed players being at less than 12 months. Also, Q4 is considered as a seasonally strong quarter and the key developers are fairly behind on their launch schedule as of 9M FY25.

 

Lodha can potentially launch over Rs 7,000 crore worth of inventory in the MMR and Bengaluru, according to analysts at HDFC Securities and JM Financial.