Summary:
After experiencing delays in project approvals through FY25, India’s top seven cities are preparing for a renewed push in real estate activity. New project launches are forecast to rise by 6% to 9% in FY26, reaching a total area between 620 and 640 million square feet. This rebound follows the record-setting pace of FY24, where new launches had hit 701 million square feet. According to ICRA, the sector has demonstrated resilience despite affordability pressures stemming from a 17% to 21% jump in average selling prices between FY23 and FY25. Sustained buyer interest, limited unsold stock and a healthy supply-demand balance continue to support market stability. During the third quarter of FY25, the replacement ratio which compares new launches to the area sold was held firm at 1x and is expected to stay consistent in the near term, reassuring both developers and investors.
Looking ahead, signs point to improving affordability. A 25 basis point reduction in the repo rate is anticipated in February 2025, followed by another potential cut of 50 basis points later in FY26. When combined with lower income tax burdens, these developments could help restore buyer sentiment and enhance purchasing power across the housing sector. While the total area sold in FY25 is projected to slip by 4% to 7%, settling around 650 to 670 million square feet, analysts remain confident in a strong comeback in FY26. The outlook for the medium term stays favourable, driven by sustained demand, more buyer-friendly financial conditions and an upcoming pipeline of projects tailored to shifting consumer preferences.
Source: IBEF
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