RESIDENTIAL REAL ESTATE MARKET IN INDIA

EXECUTIVE SUMMARY

The India Residential Real Estate Market is a substantial component of the country's real estate business, accounting for 55% of the total market size. The residential real estate industry was valued at US$ 256.9 billion in 2024 and is expected to rise at a healthy CAGR of 19.7% to US$ 907.9 billion by 2031.
According to the India Brand Equity Foundation (IBEF), India's real estate market is expected to reach $1 trillion by 2030, contributing 13% of the country's GDP by 2025. Rapid urbanization is a crucial engine of growth, with the urban population projected to reach 525 million by 2025. Urban areas already account for more than 70% of India's GDP.
Rising household earnings, increased urban migration, and lifestyle changes have all driven up demand in the residential category. Every year, around 10 million people migrate to urban regions, increasing the demand for housing. India is also one of the world's top ten price-appreciating housing markets, indicating the sector's potential for expansion.
In 2023, demand for luxury residences surged by 75%, tripling their share of overall housing sales. The emphasis on energy-efficient and ecologically friendly architecture has also grown as consumers and developers adopt more sustainable methods.
The organized retail real estate stock is predicted to increase by 28% to 82 million square feet by 2023, demonstrating the synergies between residential and commercial real estate. Meanwhile, the expanding economy drives demand in adjacent industries like as healthcare, education, e-commerce, and logistics, which indirectly supports residential real estate expansion.
Overall, the India Residential Real Estate Market is positioned as a key driver of the larger real estate industry, capitalizing on urbanization, income growth, and sustainable development trends.

 

MARKET DYNAMICS

Hyderabad real estate market witnesses surge in housing prices and lucrative opportunities to boost the market growth

Hyderabad's real estate industry is expanding rapidly, led by a noticeable trend toward luxury properties and rising housing demand. According to Knight Frank India research, the city will have over 54,000 home sales in 2024, representing an amazing 18% rise year on year.
Housing costs in Hyderabad have risen by an impressive 80% in the last four years, according to Magicbricks' analysis on housing affordability in major Indian cities. The average price for flats has reached ₹7,150 per square foot, with the city's housing inventory topping one lakh units for the first time. This is primarily focused in the western parts.
According to CBRE and CREDAI Telangana, the high-end housing market (homes priced between ₹1-2 crore) currently makes for nearly 50% of residential sales and launches. In May 2023, residences priced between ₹30 to ₹50 lakhs dominated the market, accounting for 55% of registrations. Demand for cheap homes under ₹30 lakhs stays stable at 17%. Registrations for properties priced above ₹1 crore have increased significantly, accounting for 9%.
Hyderabad accounts for around 12% of India's overall housing stock, with the top five developers providing 23% of the city's residential inventory. Hyderabad's housing stock has increased by 2.2x during the last decade, rising by 3.5x in 10 years, with 35% of this expansion occurring in the last ten quarters.
The residential real estate market is divided into four major districts: Hyderabad, Medchal-Malkajgiri, Rangareddy, and Sangareddy. Rangareddy has the highest number of residential unit registrations.
Hyderabad's rapid urbanization, robust economic growth, and growing appetite for luxury and high-end housing options are offering attractive prospects for developers and investors. The city's rising real estate marketplaces it as a key player in India's overall housing industry, laying the stage for long-term market expansion.

OPPORTUNITIES

Opportunities in Hyderabad’s Booming Real Estate Market

Hyderabad's real estate market is booming, thanks to a combination of infrastructure expansion, IT sector development, and a thriving job market. These variables are generating unprecedented opportunities for homeowners, investors, and entrepreneurs in both the residential and commercial markets.
The city's Metro extension project, led by Chief Minister A. Revanth Reddy, aims to increase real estate demand. A detailed project report (DPR) on the proposed Metro lines, including the route from Rajiv Gandhi International Airport in Shamshabad to the 'future metropolis' in Mucherla, is due soon. This infrastructure development is expected to improve connectivity and accelerate real estate developments in Hyderabad and the neighboring areas.

Commercial Real Estate Growth

Hyderabad has solidified its status as one of India's top commercial real estate markets. In the third quarter of fiscal year 2020, Hyderabad accounted for 23.7% of pan-India leasing, second only to Bengaluru with 22.9%. New commercial developments totaling 3.3 million square feet were concentrated in Gachibowli and HITECH City, cementing the city's status as an IT and business hub.

Infrastructure-Driven Demand

Hyderabad's rapid urbanization is aided by a thriving IT sector, world-class infrastructure, and increasing job possibilities. The construction of upscale residential complexes, cutting-edge business spaces, and shopping malls is attracting a wide spectrum of stakeholders, from local buyers to worldwide investors.

Investment Potential

Hyderabad provides outstanding long-term investment potential due to increased housing demand, increasing property values, and a vibrant commercial real estate industry. The city's expanding infrastructure and emphasis on sustainable development cement its status as a top destination for real estate investments in India.

Investment Opportunities: Hotspot Residential Localities in Hyderabad

Uppal is an expanding suburb that offers low-cost houses with high potential for value appreciation, making it excellent for first-time purchasers and long-term investors.

Kukatpally attracts both families and professionals due to its affordable housing options and well-established infrastructure, which includes top-tier healthcare facilities, educational institutions, and commercial complexes.

Banjara Hills and Jubilee Hills are prestigious high-end residential communities with good connectivity to the central business center, drawing luxury homeowners and investors looking for premium properties.

HITEC City is a thriving tech and commercial area with several IT enterprises, startups, and multinational corporations, resulting in high demand for both residential and rental properties.
Gachibowli is a popular site for technology businesses, educational institutions, and research facilities, with a continual high demand for residential and commercial investments due to its strategic importance

Manikonda: Provides a dynamic mix of affordable and luxurious residences, catering to a wide range of homeowner demands and giving a balanced investment opportunity.

Kompally is a fast-growing community with high-quality schools, shopping malls, and entertainment options, making it an appealing alternative for families looking for a comfortable and convenient living environment.

Nanakramguda is popular among investors and homebuyers due to its diverse range of houses, from affordable to luxurious, as well as its proximity to commercial hubs and lifestyle amenities.
These important Hyderabad neighborhoods are growing investment destinations, with prospects for value appreciation, rental income, and long-term profits in the city's booming real estate market.

 

CHALLENGES IN INDIA’S REAL ESTATE SECTOR

Mumbai's Realty Market Slowdown

The Mumbai real estate market's boom came to an end in early 2023, as noted in the February 2023 column, The slump in Mumbai real estate has arrived. Since then, sales have steadied at around 10,000 registrations per month, with 25% being redevelopment units. Despite strong anticipation of a boom over the festive season of October-December 2023, the market fell short, indicating a steady but unremarkable period for Mumbai real estate.

Infrastructure Woes in Bangalore

While Bangalore's real estate market continues to rise, the city faces significant infrastructure issues, particularly water-logging. Rapid development, insufficient drainage systems, and the disappearance of natural water bodies have made some regions susceptible to floods during the monsoon season. Water-logging interrupts daily life, damages property, and reduces property values in impacted areas. Furthermore, stagnant water raises the danger of mosquito-borne infections, raising public health issues. Prospective investors should be cautious when considering properties in flood-prone areas.

Affordability Crisis in Housing

India's housing industry is divided: while premium housing has grown, affordable housing remains out of reach for the middle class. Rising housing prices have made many homes unaffordable, underscoring the gap between supply and regular buyers' financial capability.

Shifting Attitudes Among Millennials and Gen Z

Younger generations, such as Millennials and Generation Z, are altering housing trends through their adaptable approach to homeownership. Many people opt to rent rather than buy owing to lifestyle and financial reasons, while others view real estate as a long-term investment. This generational transition is causing diverse demand patterns, disrupting established real estate tactics.

These problems highlight the intricacies of India's real estate sector, where economic, infrastructure, and generational considerations influence market dynamics and necessitate careful management by players.

 

COMPETITIVE INTELLIGENCE

1.     Brigade 

Brigade Enterprises Limited is a well-known real estate developer in India, with a broad project portfolio spanning residential, commercial, retail, and hotel sectors. The company's strategic approach emphasizes providing holistic stakeholder experiences across several disciplines.
The organization's fundamental ideology revolves upon actively contributing to public infrastructure development and viewing metropolitan areas as vital economic growth engines. Brigade aspires to deliver painstakingly crafted experiences that dynamically respond to changing market and client demands by emphasizing cultural vibrancy and customer-centric methods.
Since its inception, the company has achieved great operational success, serving over 40,000 customers and completing more than 280 buildings. These projects have an outstanding development footprint of roughly 86 million square feet across several Indian cities.
Residential Projects in Bengaluru, Chennai, Hyderabad, and Mysuru.

Brigade-Quarterly Financial Analysis

Brigade's sales fluctuated significantly year to year. Sales decreased by 21.6% between September 2023 and September 2024, from ₹1,367 crore to ₹1,072 crore. In March 2024, sales peaked at ₹1,702 crore, showing periods of strong performance.

Year-over-year net profit comparisons show fascinating tendencies. In September 2023, revenue was ₹112 crore, which increased to ₹115 crore in September 2024, indicating moderate growth. In March 2024, net earnings reached ₹211 crore, a 235% rise from the previous year's ₹63 crore.
Earnings Per Share (EPS) fluctuated significantly from year to year. March 2024's EPS of ₹8.92 was approximately three times higher than March 2023's ₹3.00. The September quarters indicated a small increase from ₹5.78 in 2023 to ₹4.87 in 2024.
Brigade's operating profit margin (OPM) remained consistent at 22-27% over quarters, despite revenue changes. This demonstrates strong cost management and operational efficiency, regardless of revenue variances.
Expenses consistently accounted for around 75-76% of sales, indicating diligent cost control. Interest expenses climbed from ₹100 crore in March 2023 to ₹123 crore in September 2024, indicating possible growth or working capital needs.
Effective tax rates varied significantly quarterly, from 3% to 38%. The most recent quarters stabilized at 24-31%, reflecting more consistent tax optimization tactics.
The financial data indicates that Brigade operates in a dynamic business environment with project-based or seasonal revenue recognition. Quarterly performance reflects possible growth prospects balanced against inherent business instability.

Brigade-Yearly Financial Analysis

Brigade's yearly sales increased by 151% in three years, from ₹1,950 crore in March 2021 to ₹4,897 crore in March 2024. Each following year saw tremendous sales growth, demonstrating the company's solid market positioning and expansion plan.
Profitability Transformation: After years of deficits, the company achieved significant profitability. In March 2021 and March 2022, net losses of ₹96 crore and ₹65 crore were recorded. However, in March 2023 and March 2024, net profits increased to ₹222 crore and ₹401 crore, respectively.
Operational Efficiency: Despite significant development, Operating Profit Margin (OPM) remained stable between 24-26% across the examined years, showing effective management. The operating profit increased from ₹476 crore in March 2021 to ₹1,202 crore in March 2024, indicating tremendous operational scalability.
Earnings Per Share (EPS) improved significantly, rising from -2.2 in March 2021 to 19.54 in March 2024. This shows a dramatic reversal and steady earnings growth, indicating good financial success and increased investor value.
Cost management involves scaling expenses proportionally with sales to ensure a controlled cost structure. The expense-to-sales ratio was reasonably stable, allowing the company to maintain profitability during its expansion phase.
Tax Strategy: The effective tax rate fluctuated significantly, from -23% in March 2021 to 331% in March 2022, before settling at 20-29% in future years. This shows that tax optimization tactics are evolving.

Brigade-Segment Financial Analysis

Brigade's overall revenue decreased from ₹1,38,011 crore in September 2023 to ₹1,08,661 crore in September 2024, a 21.3% decrease across business segments. This highlights substantial market problems and strategy recalibration.

Real estate revenue fell 35.7% year-on-year from ₹1,03,432 crore to ₹66,506 crore. This rapid fall may indicate market headwinds, regulatory changes, or strategic repositioning in the real estate portfolio.
Despite revenue decline, the hospitality segment grew 13.4% year on year. Revenue grew from ₹11,000 crore to ₹12,470 crore, suggesting strong demand and successful operational methods in the hospitality industry.
The leasing segment grew by 25.9% year on year, making it the top performer. Revenue increased from ₹23,579 crore to ₹29,685 crore, highlighting the segment's potential and strategic importance in Brigade's diversification plan.
Quarterly Performance Dynamics: The Q1-Q2 2024 growth figures show nuanced segment performances, with leasing at 14.43%, hospitality at 5.65%, and real estate suffering a negative growth of 5.96%, indicating the complex market scenario.
Strategic Implications: Divergent performance across segments demonstrates Brigade's multidimensional business approach. While real estate faces issues, hospitality and leasing offer growth stability and possibility for future prospects.

Brigade-Stock Fundamental Analysis

Brigade Enterprises has a market value of ₹30,604.80 crore, indicating strong market valuation. The stock's 52-week price range of ₹771.60 to ₹1,453.10 reflects significant market sentiment changes.

The company's financial indicators give interesting information about its operational performance. The Price-to-Earnings (P/E) ratio of 65.57 indicates that investors expect strong future growth, perhaps resulting in significant earnings expansion. Return on Capital Employed (ROCE) of 12.70% and Return on Equity (ROE) of 11.70% demonstrate moderate operational efficiency, indicating the company's capacity to create returns from its capital and equity investments.

BRIGADE SPEAKER VOICE - PAVITRA SHANKAR, MANAGING DIRECTOR

In fiscal year 2024, Brigade Enterprises achieved its highest ever sales of ₹6,013 crore, demonstrating strategic growth and market resiliency. We opened the Ramaiah Memorial Hospital in Brigade Orchards, demonstrating our commitment to integrated, smart township development and many products beyond traditional real estate.
Our residential sector approach has been completely centered on Bangalore, with 92% of our presales coming from this thriving market. However, we are actively increasing our geographical footprint, with planned launches in Chennai and Hyderabad in fiscal year 2025. This diversification is crucial to our long-term growth strategy.
Our FY25 development pipeline includes 12.61 million square feet of residential projects, carefully dispersed throughout our core markets: 7.5 million in Bangalore, 3 million in Chennai, and 2 million in Hyderabad. Our present land bank reflects this strategic stance, with about 57% in Bangalore and 33% in Chennai, supported by an ambitious expansion strategy in Hyderabad.
Market dynamics are especially positive. We've seen a stunning 23% year-on-year increase in realization, principally due to robust market demand for our mid-segment and upper-mid segment items. Hyderabad's market exhibits potential inventory movement patterns comparable to Bangalore, however in Chennai, we'll carefully balance realization and velocity on a project-by-project level.
Looking ahead, we are enthusiastic about sustained performance and growth, which are supported by our strategic market positioning and robust development strategy.

BRIGADE-KEY HIGHLIGHTS OF BRIGADE ENTERPRISES

Brigade Enterprises has emerged as a pioneering force in integrated development in India, defined by strategic global collaborations with famous design companies such as Ricardo Bofill from Barcelona, NBBJ from Seattle, and HOK from New York. These multinational alliances have propelled the organization to the forefront of creative real estate development.
The company's operational size is significant, with 7.55 million square feet of real estate sold in FY24, its best result to date. Brigade Enterprises has successfully completed over 200 buildings, serving more than 35,000 satisfied clients, with roughly 22 million square feet of projects ongoing in various stages of development and a total developed area of 57 million square feet.
Customer-centricity remains a primary objective, as seen by creative projects such as Here4You, Brigade Plus, and the Belong app. These platforms increase client involvement and offer a wide range of services, including interior design and community administration. The company's market dominance is further demonstrated by its ranking in the top ten in the country for sales bookings in FY24.
Brigade Enterprises continues to transform India's real estate environment by combining worldwide design knowledge, customer-focused innovations, and large development capabilities.

BRIGADE-COMPLETED PROJECTS FY24

Brigade Enterprises successfully completed five residential projects in Bengaluru during fiscal year 2024, expanding its strong portfolio in the city's best locales. These completed projects demonstrate the company's dedication to excellent residential development in Bangalore's thriving real estate market.
Brigade Bricklane, Brigade 7 Gardens, Kino at Brigade Orchards, Brigade Parkside North, and The Residences at Brigade Tech Gardens are all finished projects. Each project exemplifies the company's strategic focus on building modern, well-designed living spaces in major urban areas, bolstering Brigade Enterprises' position as Bengaluru's premier real estate developer.
These developments not only add to the company's growing inventory, but also demonstrate its ability to continually provide high-quality residential projects that match the changing needs of urban homeowners in Bangalore.

BRIGADE-UNDER CONSTRUCTION PROJECTS FY24

Brigade Enterprises had a solid project pipeline in fiscal year 2024, with many residential buildings under construction in Bengaluru and Chennai. The company's under-construction portfolio illustrates its strategic expansion and dedication to providing different residential choices.
Brigade Cornerstone Utopia, Goldspire and Ivory at Brigade Orchards, Brigade Laguna, Brigade El Dorado, Brigade Komarla Heights, Brigade Sanctuary, Brigade Valencia, Brigade Horizon, and Brigade Nanda Heights are among the developments now underway in Bengaluru. These complexes cover multiple parts and places throughout the city, showcasing Brigade's all-encompassing approach to residential real estate.
Brigade Xanadu, a Chennai project, reflects the company's geographical diversification plan, expanding its successful development paradigm beyond Bengaluru. This broad portfolio of under-construction projects demonstrates Brigade Enterprises' excellent growth trajectory and flexibility to address changing market demands in various urban regions.

BRIGADE-FY24 PERFORMANCE HIGHLIGHTS

Brigade Enterprises experienced exceptional financial performance in fiscal year 2024, marking a watershed moment in the company's growth trajectory. Real estate sales achieved an all-time high of ₹6,013 Crore, with a solid sales volume of 7.55 Mn Sqft. This is a significant 46% growth in sales value.
The company's pricing strategy boosted average realization by 23% to ₹7,968 per Sqft. This result demonstrates Brigade Enterprises' capacity to charge premium pricing, which is fueled by excellent developments, strategic location selection, and solid market positioning.
These results demonstrate the company's endurance, market experience, and ongoing expansion in the competitive real estate scene, establishing Brigade Enterprises as a key participant in the Indian real estate market.