The New Projects launch has created robust momentum.
Although unsold inventory has increased, Analysts anticipate the current financial year (FY24-25) will set a record, attributed to robust momentum from the launch of new projects.
One can get a convincing picture of the national real estate market. Two deterrents are lower volumes and stagnate prices.
From April to August 2024, sales bookings in the top ten markets have gained 6% year-on-year; sales volume has dropped by 8%.
Unsold stock rises. Due to strong new launch traction, experts expect FY25 to be a record year.
The sector rose in all main markets after Covid-19. Eleven real estate giants grew 43% annually from FY21-24.
These 11 firms have booked Rs 27,800 crore in sales in Q1FY25, indicating a 27% YoY increase in sales bookings to Rs 1.25 trillion in FY25.
New Launches of GDV(Gross Development Value) in Planning
Plans call for further launches with a gross development value (GDV) of Rs 1.52 trillion.
Right now, the inventory on hand comes to Rs 1.47 trillion. New Launches with a GDV of Rs 1.15 trillion are slated in the second half of FY25.
There are times when sales plans are higher than 100% of unused inventory, which means that new launches need to be released right away.
Bengaluru a Key market faces delays in the New projects launch
In Bengaluru, a key market, getting permissions can be tough, and companies with a lot at stake run the risk of being late.
The Bengaluru market is where 60% of Sobha’s extra launch value is at risk. Other companies like Brigade (40% exposure), Century (38% exposure), Arvind Smart (28% exposure), and GPL (18% exposure) have a cause for concern.
Cash operating profit margins:
While revenues may increase owing to premiumization, price increases may be modest.
Major entities may attain a gain of 20-25 percent, but midcap entities might realize a 30 percent increase in sales bookings.
A review of cash flow for real estate developers in FY24 reveals that cash operating profit margins were steady at 39 percent, consistent with FY22 and FY23.
Nine developers saw negative working capital cycles, in contrast to six developers in FY23.
Capital expenditures connected to land increased to 29 percent from 25 percent in FY23, although net debt decreased for nine developers, and the average interest expense as a proportion of collections declined to 6 percent in FY24 from 7 percent in FY23.
In FY24 this generated significant operating cash flow (OCF).
There was considerable variation. During FY24 DLF, Oberoi, Signature Global, and Puravankara observed negative cycles in working capital.
Though the working capital cycle strengthened, Godrej’s OCF in FY24 was in the red.
Mahindra Lifespaces, Brigade, Prestige Estates, and Kolte-Patil all required more operating capital in the financial year 2024.
With the most money on hand, Rustomjee and Lodha ranked second in FY24 after DLF. Shriram Properties, Kolte-Patil, and Sobha earned the least of any revenue.
In FY24, DLF and Godrej Properties kept their cash operating profit margins the same, while Puravankara and Shriram Properties got better and Kolte-Patil and Keystone got worse.
Strong Demand Drives Real Estate Expansion with New Projects Launch
Assuming that the strong demand for homes continues, developers will need to concentrate on business expansion, which will result in increased land capital expenditures.
This is made feasible by lower leverage, which happens as a result of improved cash flow creation and equity fund increases. When it comes to deleveraging, developers could put more emphasis on company development.
When compared to the other firms on the list, Godrej, Prestige, Signature, and Brigade had the most significant growth in the fiscal year 24.
The real estate industry has become more diverse. While Brigade is developing in Chennai and Hyderabad, Oberoi Realty is looking at the Delhi-National Capital Region; DLF has entered Mumbai and Hyderabad; Prestige Estates is developing in Mumbai and Hyderabad.
Developers that are listed in Tier I are likewise attempting to increase their market share in comparison to the informal category.
Based on the information provided by Propequity, the top ten listed developers have increased their market share by eight percent from the year 2019.
As a result of rapid sales of high-quality releases, there is now a lack of inventory of this kind. Under the current circumstances, players who are ranked in Tier I and have good balance sheets will be given preference.
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