India's Tier-1 Residential Real Estate Market Shows Moderation in FY25
India's tier-1 residential real estate market has experienced a moderation in sales volumes during FY25, with a 6% decline, particularly in Q4. However, overall collections have shown a healthy uptick, driven by premium offerings and higher realizations.
Residential Real EstateFinancial YearGrowthDemandInterest RateReal Estate NewsJun 16, 2025
The rating agency’s peer-set of rated developers witnessed a 6% year-on-year (yoy) decline in sales volumes in FY25, with a steeper 13% drop in the fourth quarter alone. However, the overall value of sales rose 9% on-year in Q4FY25 and across FY25, buoyed by an improved product mix and higher realizations.
“The 4QFY25 results reflect the impact of a high base effect, which has pulled down volumes. However, an improved product mix has supported better realizations, leading to modest growth in booking value,” said Mahaveer Shankarlal Jain, Director, Corporate Ratings, Ind-Ra. According to him, the residential real estate cycle appears to be decelerating, influenced by both the high base effect and delays in project launches. The recently announced interest rate cut could serve as a significant tailwind, particularly for the affordable and mass-market segments, and is expected to support mid-single-digit growth in FY26 bookings.
The ratings agency expects a moderation in booking value growth in FY26 from the 23% on-year increase seen in FY25, mainly due to the high base established between FY22 and FY25. Nevertheless, it anticipates continued value growth in the low-to-mid single digits, supported by sector consolidation, policy stability, and sustained demand in the mid-premium segment.
Pre-sales value for tier-1 players grew moderately by 9% yoy in Q4FY25, down from 69% yoy in Q4FY24. Among the top 11 developers, four saw a decline. Average realizations surged 24% yoy in Q4FY25, supported by a shift toward premium and luxury offerings. Collections improved significantly, rising 16% yoy in Q4FY25 and 21% across FY25 to Rs 71,800 crore.
Despite a 6% yoy rise in gross debt to Rs 50,350 crore by March 2025, overall leverage remained comfortable. The ratings agency expects balance sheets to stay resilient amid steady execution and strong collections, even with softer pre-sales growth.
Frequently Asked Questions
What is the current state of the tier-1 residential real estate market in India?
The tier-1 residential real estate market in India is showing signs of moderation in FY25, with sales volumes declining by 6%, particularly in Q4. However, overall collections have improved, driven by premium offerings and higher realizations.
What factors are influencing the moderation in sales volumes?
The moderation in sales volumes is influenced by the high base effect from the previous years and delays in project launches. The recent interest rate cut is expected to provide a boost, especially for the affordable and mass-market segments.
How have collections performed in the real estate sector?
Collections have improved significantly, rising 16% year-on-year in Q4FY25 and 21% across FY25 to Rs 71,800 crore. This is attributed to better realizations and a shift toward premium and luxury offerings.
What is the outlook for the residential real estate market in FY26?
The ratings agency expects a moderation in booking value growth in FY26, with a forecast of low-to-mid single-digit growth. This is supported by sector consolidation, policy stability, and sustained demand in the mid-premium segment.
How has the product mix and realizations affected the market?
The product mix has shifted toward premium and luxury offerings, leading to higher realizations. This has supported modest growth in booking value, despite the decline in sales volumes.
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