Real estate firms on solid ground

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₹3,353 crore, also the highest Q1 number delivered by it. With that, the company has achieved 23% of its FY24 pre-sales guidance of ₹14,500 crore. Prestige Estates Projects Ltd saw sales value growth of 30% y-o-y in Q1.

On an aggregate basis, Motilal Oswal Financial Services Ltd expects realty companies under its coverage to clock 9% y-o-y volume growth in Q1FY24. Of course, given the high base, sequentially volume could be soft. Nonetheless, investors seem to be in an upbeat mood.

In this calendar year so far, Nifty Realty Index has rallied by 24.2%. Also, with interest rate hikes largely out of the sector’s way, sales could get a further fillip as home loan rates could remain steady. The premium and luxury segments could continue to do well, however, affordable housing, which is relatively more sensitive to higher interest rates could take time to revive.

“Higher mortgage rates have hit affordable and mid-income housing, but luxury demand remains indifferent to the interest rate. This is because luxury segment is driven by wealth effect," Parikshit Kandpal, vice president, Ins-titutional Research, HDFC Securities, said. And since most listed real estate companies have meaningful exposure to this segment, it augurs well for their sales prospects.

But to keep sales growth intact, the pace of new launches is crucial going ahead. “Considering a scenario where the interest rate hikes are unlikely in the medium-term, companies could have strong business for next two years (FY24 and FY25). But this depends on how fast they are able to launch proj-ects and new business developments," said Ronald Siyoni, associate vice president, Sharekhan by BNP Paribas.