New Delhi: India is set to witness mega residential project launches in the first quarter of 2025 after a strong ‘upgrade’ demand in the premium segment, and developers will need to pivot towards more mid-income housing as luxury housing hits a high base, a report by HSBC Global Research showed on Wednesday.

The past four years have been dominated by “upgrade” demand, which has served developers well in achieving better pricing.

“We think another notable preference for high-rises in the Indian economy has increased the addressable market for developers,” said HSBC in the note.

In Q1, developers will attempt major launches to meet their FY25 pre-sales guidance. Over the year, “we expect a demand shift to more mid-income levels, which has implications for sales value and margins,” the note said, adding that the benefits of the strength of the upper-income segment will start trickling down to the mid-income segment of the economy.

In the past four years (2021-24), residential real estate pre-sales volumes and values increased by compound annual growth rates (CAGRs) of 18 percent and 31 percent, respectively.

“We still expect growth in 2025 as 2024 was weaker on launches, but that the high base will start impacting the pace of growth,” the note added.

Limited unsold inventory is unlikely to put pressure on pricing, which is the key to presales momentum.

“After three years of strong performance, we expect that some level of base effect will start showing up in sales momentum,” said the note.

Real estate stocks tend to be more sensitive to interest rates and could benefit from rate cuts in 2025.

“We expect investors to look for companies’ ability to sustainably scale up their business via new launches and by improving collection run-rates and operating cash flow,” said the note.

Overall, HSBC Global Research expects launch momentum to return as approval issues are sorted out and sales momentum is cultivated in 2025.

 

 

 

 

 

 

 

–IANS

(File Photo: IANS)