Established residential realtors' topline to grow 35% in FY22: Report

There has been a significant recovery in the property market as the established realtors reported sale of Rs 34,000 crore in the first nine months of FY22, equalling the amount achieved in the entire FY21, a report said on Tuesday.

The established residential realtors' topline is expected to rise by 35 per cent in FY22, compared to 14 per cent in FY21, it added.

This jump in sales for the 11 listed players was attributed to affordability and a preference for larger homes, owing to a surge in remote working driven by the COVID-19 pandemic, as per the report by rating agency Crisil.

This has led to an improvement in the market share of these players to about 22 per cent against the 14-16 per cent before the COVID pandemic struck, it said.

Apart from the higher sale of residential dwellings, this set of developers has been able to navigate the pandemic, courtesy equity raising and monetisation of land and other assets, it said.

"Increased affordability due to low-interest rates and flattish capital values, rising demand for bigger homes, and government measures in the past two fiscals have provided a fillip to residential realty," Anand Kulkarni, a director at the agency, said.

The sector did face reverses due to the first wave of the pandemic in FY21 but has continued on the upward trajectory in the latter two waves, he said, adding that this will give a fillip to growth.

The established residential realtors' toplines will grow by up to 35 per cent in FY22, up from 14 per cent in FY21, he said, estimating them to clock a 10-15 per cent jump in FY23.

The sector has seen a lower impact and a shorter disruption period with each passing wave, with sales at 70-75 per cent of the pre-pandemic level during the second wave compared with 50-55 per cent in the first, underlining the sector's resilience, the agency said.

Home prices in the top six cities are expected to rise marginally soon as realtors will be passing on the impact of inflation in labour and material costs on the improvement in demand, the agency said, adding that the same is reflected in a dip in inventory levels to 2.5 years as against earlier 3.5 years.

On the balance-sheet strengthening front, the established realtors have deleveraged in the five fiscals through 2022 by raising equity and monetising commercial assets and land worth Rs 50,000 crore, it said.

Some mid-sized developers, which have historically maintained low leverage, are also well-placed in the current scenario. However, leveraged developers will continue to lose market share as they are crippled by high debt to total assets ratio of above 50 per cent, weak liquidity, and limited ability to raise equity or monetise commercial assets, it added.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)