MMR to Maintain Dominance as India’s Leading Real Estate Hub in FY24, Says ICRA


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    Rating agency ICRA announced on October 17 that it anticipates a year-on-year (YoY) growth of 8-9 percent in the area sold in the Mumbai Metropolitan Region (MMR) for the fiscal year 2024. This growth is expected to be underpinned by sustained end-user demand and favorable affordability.

    MMR stands as the largest residential real estate market, contributing 25 percent of the total area sold in the fiscal year 2023 among the top seven markets in the country. These markets encompass the National Capital Region (NCR), Bengaluru, Hyderabad, Pune, Kolkata, and Chennai, in addition to MMR. According to ICRA, MMR is likely to maintain its prominent position in the fiscal year 2024.

    Robust sales of residential properties, coupled with controlled new project launches, have resulted in a decade-low unsold inventory of 182 million square feet as of June 2023. This inventory represents 28 percent of the overall unsold inventory in the top seven cities, as stated by the rating agency.

    In the fiscal year 2023, MMR’s total sales reached 151 million square feet, surpassing the new launches introduced during the year, which amounted to 141 million square feet, with a replacement ratio of 0.9 times. ICRA predicts that the replacement ratio will remain approximately one time in the fiscal year 2024. The continual healthy sales pace, combined with controlled launches, has significantly reduced the years-to-sell metric to 1.2 years as of June 2023, down from 2.8 years in June 2020. ICRA’s outlook indicates that new launches in MMR are projected to reach around 145 million square feet in the fiscal year 2024, with years-to-sell expected to stay in the range of 1-1.2 years as of March 2024, according to Tushar Bharambe, Assistant Vice President & Sector Head-Corporate Ratings at ICRA Limited.

    Over the period from fiscal year 2020 to fiscal year 2024, average selling prices in MMR have grown at a compound annual growth rate of 4.3 percent, a figure lower than the average of the top seven cities at 6.6 percent.

    Housing sales in the MMR market appear to be primarily focused on middle-income segment homes, with ticket sizes ranging between Rs 1 crore and Rs 3.5 crore. This segment has observed a consistent rise in its share of overall sales, increasing from 26 percent in Q4FY20 to 35 percent in Q1FY24. The luxury segment, comprising homes above Rs 3.5 crore, has also witnessed an increase in its share, rising from 7 percent to 10 percent during the same period. ICRA anticipates that the trend of middle-income and luxury segment sales will persist, driven by the desire for home ownership and upgrades among buyers.

    Also Read: Embassy REIT Aims for 20% YoY Increase in Leasing, Eyes 6 Million Sq. Ft. in FY24


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