[GAGA REALTY] [JOINT VENTURE] [GAGA HOMES]
The tier I residential real estate inventory stock of the top eight cities across India remains at comfortable level compared to historical levels and the quarter-to-sales ratio is at moderate levels of 11 compared to the past six years’ high of 13 in 2018-19, said India Ratings & Research (Ind-Ra).The ratings agency, based on the data provided by Liases Foras, has compared city-wise unsold stock that stacks favourably for Pune and Bengaluru, while other major cities including Mumbai Metropolitan Region (MMR) and Chennai have a highest inventory build-up.Within India Ratings rated peers, the change in reported year-end inventory was at 26%, with lowest for realty developers Sobha and Sunteck Realty owing to a lower number of launches, than that for Godrej Properties and Macrotech Developers which grew strongly.“The high absorption in FY23 and FY24 makes the quarter-to-sales look comfortable. As such, the high base of absorption should sustain to help ward-off any oversupply risk,” said Mahaveer Jain, Director and Head of Real Estate, Ind-Ra.As of March 2024, the finished inventory was at a moderate level with the finished inventory to absorption ratio at about 14% compared to the historical band of 35%.The number of housing launches in FY24 was strong, following the strong pre-sales growth since the six quarters ended March 2024. This is likely to have led to the launches to pre-sales ratio tapering down to 1.25x in FY24 (FY23: 1.4x), India Ratings said citing the Liases Foraes data. However, the ratio is substantially higher than the below 1.0x observed during FY18-FY20.As such, the ratings agency expects there is a fair amount of room to absorb, in an unlikely situation of, significant slowdown in pre-sales. However, given the high base of FY23 and FY24 with 12%-15% and 20%-25% on-year growth in pre-sales and realisations, respectively, a lower growth rate in FY25 cannot be ruled out.Pre-sales of Ind-Ra rated tier-1 residential real estate players grew at a record 71% on-year in the March quarter, highest in the past seven quarters (FY23: 11%). The sector continues to benefit from consolidation with home buyers preferring tier-1 players as there is limited supply of finished inventory.The peer-set aggregate collections grew 29% on-year in the March quarter, the highest in the past seven quarters. Leverage remained high for the players with large commercial real estate under construction development, India Ratings said.Overall, the peer set’s leveraging intensity reduced to 53% of the pre-sales compared to 59% as at end-March 2023. However, according to the ratings agency, the gross debt to collections ratio marginally increased for the peer-set to 2.4x as at FYE24 from FYE23’s 2.3x due to the combined impact of high launches and lower collections due to the high mix of early-stage projects.
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