Several industry experts feel that the current muted housing demand is only a short-term phenomenon which may last for only a couple of quarters, with a robust pipeline of projects, several new project launches, and softening of realty input costs. Demand has been impacted with muted figures for the December-2022 quarter. Yet, the industry remains optimistic despite short-term stagnancy. Experts feel that margins of realty companies may be under a little pressure, owing to increasing rates of interest and a softening in demand for the industry. The operational performance of some companies may also take a hit as per experts.
Yet, they feel that this muted demand will only last temporarily with developers choosing to hike prices only in select categories in order to tackle some concerns. Several real estate companies have reported their quarterly figures for October-December 2022, indicating how some of them have taken this hit, while some have seen moderate impact on their operational performance, margins, and revenues as well. Reports indicate that Oberoi Realty saw a 67% dip in booking values for the period to Rs. 639 crore in comparison to the year-ago period when it did Rs. 1,965 crore. The booking values have also gone down in comparison to the earlier quarters, dipping by 45% from the September quarter of Rs. 1,156 crore.
Macrotech Developers had income coming down by 12% to touch Rs. 1,902.44 crore, with 15% lower operational profits and a slide in margins by 22.77%. Yet, net profits went up by 41% (year-on-year) to touch Rs 404.98 crore. Analysts feel that the real estate industry will see good momentum throughout 2023 with sales figures likely to remain steady due to favorable parameters and an easing of inflationary worries by the second half of the calendar year. The residential segment saw excellent growth last year despite several headwinds.
Experts feel that home ownership is the key sentiment behind buoyancy in the market. The Co-Founder and CFO, Square Yards, Piyush Bothra, stated that residential projects throughout the country have seen a rise in bookings with homebuyers not holding back on their home buying plans. He also added that though home prices increased slightly and interest rates were revised, affordability is still an attraction for most buyers. This has sustained higher demand in the residential category due to increasing incomes, better macroeconomic indicators, robust GDP outlook, and a need for both emotional and financial security. Many buyers are also motivated by the desire to own larger homes. The upper middle or middle class categories, which also come within the affordable housing space, are likely to go ahead with their home purchase decisions due to pent-up requirements for larger homes and also considering the fact that current interest rates are still within an affordable threshold according to Piyush Bothra.
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Published Date: Jan 27, 2023
