Top 5 Developers: Supply, Not Demand, is the Constraint

New Delhi, Aug 6 (PTI) India's top five real estate developers are faced with the challenge of "supply" rather than residential demand and any short-term aberration in urban demand will not impact their sales, according to realty major Lodha Developers MD Abhishek Lodha.

During 2024-25 fiscal, Godrej Properties, DLF, Lodha Developers, Prestige Estates and Signature Global were the top five listed real estate companies in terms of pre-sales with combined pre-sales of around Rs 96,000 crore. Post-COVID pandemic, the housing market has seen demand shifting towards bigger and branded real estate players.

In a recent conference call with analysts, Abhishek Lodha listed out various factors which are driving demand for the top five builders, the foremost being the consumers wanting to upgrade their quality of life by purchasing homes from top builders who have a better track record of executing projects.

"...while there may be concerns about the strength of overall demand in urban India, it is important to note that the sales of the top five real estate developers who are focused on quality and consumer service, thereby having strong brands are constrained by supply and not by demand," he said.

As per the transcript uploaded on the stock exchanges, Abhishek Lodha noted that the Indian real estate market is in a unique position with top developers unable to satiate the demand for their properties.

Therefore, Lodha said that any short-term aberration in the demand side is unlikely to impact the sales of the top builders.

He highlighted that the performance of the key developers during the last fiscal was very strong.

"If you look at the numbers for this (April-June) quarter, very strong. So there is no reason why there should be any concerns about demand, especially for the top five developers," Lodha said as he re-emphasised that the sales of the top five developers are "supply constrained, not demand constrained"

"Consumers really want to upgrade their quality of life in a low-risk manner, and that's what the top five developers offer," he added.

Talking about diversifying into different geographies, Abhishek said the top few developers will be present in the top few cities of the country.

"The depth of their presence will improve the quality of the market as well as enable the consumer to get the best quality product irrespective of the city that they are living in," he added.

Abhishek also opined that Indian real estate is at the start of a very long-term up cycle as India moves from low-income to mid-income.

"There may be some days or some months or some quarters which are weaker. But that's the broad direction," he added.

Abhishek Lodha also mentioned that the affordable housing segment has degrown but the other segments are performing well.

"It is also important to do the analysis in value terms rather than just in unit terms because that's what you would do in most other categories," he told analysts.

In terms of annual sales bookings, Godrej Properties emerged as the largest listed player during the last fiscal with pre-sales of Rs 29,444 crore. Its pre-sales stood at Rs 22,527 crore during 2023-24.

Sales bookings of DLF, India's largest real estate firm in terms of market capitalisation, rose to Rs 21,223 crore from Rs 14,778 crore during the period under review.

Mumbai-based Lodha Developers Ltd reported sale bookings of Rs 17,630 crore in FY25 as against Rs 14,520 crore in the preceding year.

Bengaluru-based Prestige Estates Projects clocked sale bookings of Rs 17,023 crore last fiscal as against Rs 21,040 crore in 2023-24, while Delhi-NCR based Signature Global achieved sales bookings of Rs 10,290 crore as against Rs 7,270 crore.