India’s residential property market continues to display strong momentum, with analysts at Elara Securities (India) Private Limited arguing the current upcycle is “far from fatigue”.
Primary residential sales in Tier-1 cities crossed 1 billion square feet in FY24 — equivalent to roughly $90bn — marking a 40% increase over the previous cycle peak. The brokerage attributes the surge to renewed buyer confidence following earlier regulatory disruptions such as GST, RERA and demonetisation, alongside a structural shift in home-ownership preferences after the pandemic.
Data shows robust absorption of new launches, with take rates improving by 14 percentage points compared with FY17. Homebuyers are also opting for larger homes, with average unit size rising about 20% versus FY20-21. Meanwhile, physical assets (excluding gold and silver) now account for roughly 70% of household savings.
Structural tailwinds remain strong
Analysts believe the sector still has significant headroom for growth. Historical comparisons with China suggest residential sales could expand 1.5–2.6 times relative to per-capita GDP growth.
Affordability metrics remain supportive. The property price-to-income ratio stands at about 3.3 times, below the 10-year average of 3.7 times, while corporate wage growth exceeding 10% between FY22 and FY24 has bolstered purchasing power. Grade-A residential prices have risen at up to 25% CAGR during CY19-24, accompanied by rental yield expansion of 30–80 basis points across major metros.
Consolidation favours large developers
The report highlights a clear shift toward organised players. Developer counts in Bengaluru, Chennai and NCR have fallen sharply since FY13, reflecting rising land costs — up 20–200% versus pre-Covid — and elevated funding costs of 18–24%, which have squeezed smaller builders.
Listed developers’ combined supply and absorption market share has climbed to 27% in FY24 from 21% in FY15. Against this backdrop, Elara names Oberoi Realty as its top sector pick, citing strong brand positioning, scale and cash-flow visibility.
However, analysts caution that risks remain, including potential oversupply, regulatory disruptions and a persistently high inflation or interest-rate environment.
