Economic Overview
The global economy experienced moderate growth during the financial year 2024-25. Despite challenges such as geopolitical tension, inflationary pressures, and supply chain disruptions, the real estate sector remained resilient, adapting to shifting market dynamics and consumer behaviours. The Indian Economy showed a steady recovery post pandemic with a focus on infrastructure development, urbanization, and favourable government policies which bolstered the real estate market. The Indian economy has had a smooth sailing so far in 2024 due to sustained GDP growth and reducing inflationary pressures; the central bank also shifted its stance to support growth. However, global financial volatility and subdued business sentiment may pose some challenges. For FY 2025-26, India?s GDP growth is forecasted to range between 6.3 percent and 6.8 percent, depending on external factors. Currently, most agencies peg the country?s growth in the range of 5.5-6.5%.
Indian Economy
India has emerged as the fastest growing major economy in the world and is expected to be one of the top three economic powers in the world over the next 10-15 years, backed by its robust democracy and strong partnerships. This growth is underpinned by a strong democratic framework and robust international partnerships. The policies and reforms implemented by the Indian government play a crucial role in shaping the economy. Measures related to taxation, investment regulations, labour laws, infrastructure development, and ease of doing business can impact business sentiment, investment flows, and economic growth. Improving infrastructure is crucial for sustaining economic growth. Investments in transportation, power, telecommunications, and urban development can enhance productivity, attract investments, and promote regional development. Controlling inflation is an important aspect of managing the Indian economy. The Reserve Bank of India (RBI), the countrys central bank, formulates monetary policies to manage inflation and promote economic stability. Interest rates, liquidity measures, and credit availability are key tools used by the RBI to manage inflation and support growth.
India?s economy recovered quickly from the pandemic and further growth is expected to be supported by solid domestic demand and increase in capital investments. The International Monetary Fund (IMF) and Reserve Bank of India (RBI) estimate real GDP growth of 6.1% in 2023-24 and 6.5% in 2024-25.
In current dollar terms, India?s gross domestic product (GDP) is now $3.9 trillion compared to $3.6 trillion in 2023-24, according to an estimate by research agency Crisil after the data was released. According to the International Monetary Fund, India is on pace to become the fourth largest economy in the world with GDP of $4.3 trillion in 2025-26. Maintaining fiscal discipline and managing public debt are essential for economic stability. Sound fiscal policies, effective budgetary management, and revenue generation efforts play a critical role in ensuring macroeconomic stability and long-term growth prospects.
Industry Overview
Indian real estate sector has witnessed high growth in the recent times with rise in demand for office as well as residential spaces. Private equity (PE) investments in the Indian real estate sector rose sharply to USD 2.4 billion ( 203 billion) during the first half (H1) of 2025, marking a 38% year-on-year (YoY) growth, according to a Savills India. The Securities and Exchange Board of India lowered the minimum application value for Real Estate Investment Trusts from Rs. 50,000 (US$ 685.28) to Rs. 10,000-15,000 (US$ 137.06-205.59) to make the market more accessible to small and retail investors. The new framework for Small and Medium Real Estate Investment Trusts (SM REITs) has been praised by the realtors association CREDAI, stating that it will enhance the flow of funds into the Indian real estate market. Construction is the fifth largest sector in terms of FDI inflow. FDI inflows have seen a steady rise from USD 36.05 billion in FY 2013 14 to USD 81.04 billion (provisional) in FY 2024 25, marking a 14% increase from USD 71.28 billion in FY 2023 24. Some of the major investments and developments in this sector are as follows: - Foreign investors pump around US$ 3.1 billion yearly into Indian real estate, with a 37% YoY increase in foreign inflows in first half of 2024. - In 2023, luxury home sales in India priced at Rs. 4 crore and above and surged by 85%, doubling their share in total housing sales. - The Government has allowed FDI of up to 100% for townships and settlements development projects. - The Union Budget 2025-26 boosts homeowners with nil tax on two self-occupied properties (earlier one) and raises TDS threshold on rent from Rs. 2.4 lakh (US$ 2,769) to Rs. 6 lakhs (US$ 6,924), driving property ownership demand. - In the Union Budget 2024-25, PM Awas Yojana Urban 2.0 will address housing needs for 1 crore urban poor and middle-class families with a Rs. 10 lakh crore (US$ 120.16 billion) investment. - As of March, 2025, 118.64 lakh houses have been sanctioned and approximately 92 lakh houses have been completed and delivered to urban poor under the Pradhan Mantri Awas Yojana- Urban (PMAY-U).
- Mumbai Metropolitan Region (MMR) Market Overview
As we look toward 2025, the city?s real estate market is expected to witness profound shifts influenced by economic recovery, infrastructural improvements, and evolving consumer preferences. I. Mumbai Continues to maintain its position as the largest market in terms of real estate sales with sale exceeding 141,000 units in the FY 2024-2025. While the growth in sales remained steady compared to the FY 2023-2024, the city has witnessed an 11% YoY decline in the total sales during the FY 2024-2025. The market has maintained the elevated sales level even as the growth rate is tapering.
II. The optimism for sales momentum to improve continues to remain high supported by factors such as the expected rise in income levels and the strong desire for homeownership, which continue to be key drivers for residential sales in the Mumbai market.
III. Although there was a minor dip in residential market transactions, the number of new project launches continued to remain robust. The Mumbai Metropolitan Region (MMR) residential market experienced strong growth in the last quarter of 2024, with a 5% increase in registered transactions and an 11% rise in the total sales value. Specifically, 68,082 units were registered, with a total sales value of Rs 68,025 crore. 85% of the supply added in 2022 are in suburban markets like the Western Suburbs, Thane, Peripheral Central Suburbs and Central Suburbs.
IV. The weighted average residential property prices have recorded an upward movement in H1 2023 by 9% YoY. The increased raw material prices coupled with strong demand were the primary drivers for developers to opt for price rise.
V. The unsold inventory has risen by 6.5% YoY in FY 2024-2025 on account of the massive supply added in the market. However, the "Construction" sector is expected to grow by 9.4%.
VI. The Mumbai Metropolitan Regions (MMR) residential market is set to experience robust growth and expansion in the upcoming quarters. With its status as a leading financial and commercial hub, the region continues to attract a diverse population, including professionals and investors. This influx of people, coupled with limited available land, is expected to drive demand for residential properties, leading to potential price appreciation. Additionally, the governments continued focus on infrastructure development and urban planning initiatives will enhance connectivity and further boost the attractiveness of MMRs real estate market.
VII. As our Company is engaged in the business of Real-Estate Development &
Construction Activities in the region of Mumbai comes under the Mumbai
Metropolitan Region (MMR), India?s most valued real estate market, is currently experiencing a surge in end user demand, promising sustained sales momentum. This optimism, however is tempered by concern over rising property prices and project execution risks.
VIII. In the first quarter of 2024, Mumbais real estate market secured the third position globally in the Knight Franks Prime Global Cities Index for prime residential price growth, experiencing an 11.5% year-on-year increase, indicating a strong demand for lifestyle upgrades among affluent buyers.
Impact of Economic and Regulatory Changes on Real Estate
In 2024, economic fluctuations and regulatory shifts will significantly impact the real estate sector in India. Factors such as inflation, interest rates, and government policies will play a crucial role in shaping market dynamics. The introduction of Real Estate Regulatory Authority (RERA) regulations has improved transparency and accountability, boosting confidence among consumers and investors. However, challenges persist, particularly in regulatory compliance and procedural inefficiencies. Delays in approvals and adherence to regulations can prolong project timelines and increase cost, emphasising the need to navigate regulatory framework efficiently. Stakeholders must stay vigilant and adaptable amidst the changing economic and regulatory environment. Compliance with RERA guidelines remains crucial for maintaining consumer trust and market integrity. Additionally, streamlining regulatory processes and addressing compliance hurdle are essential to mitigate project risks and ensure operational efficiency. By proactively tackling these challenges, the real estate industry can maximise its growth potential and resilience amid economic uncertainties and regulatory complexities.
Emerging Trends in Residential Real Estate
Luxury Real Estate has long been a resilient segment, often maintaining stability despite fluctuations in external factors like interest rates and market prices. However, the preferences of luxury homebuyers are constantly evolving and 2025 is expected to bring notable shifts in their purchasing behaviours. In the upcoming year, we anticipated changes in the buying preferences of luxury home seekers. Established developers are projected to focus on premium developments, leveraging advanced technologies to enhance the residential experience. Technologies such as Artificial Intelligence (AI) and chatbots are poised to play a pivotal role, offering personalised services like virtual concierge services, biometric authentication, and heightened security measures, thus elevating the luxury living experience. Moreover, there is a continued demand for second homes, vacation properties, and plotted developments in 2025. Despite economic fluctuations, the allure of owing a second home remains strong, fueled by desires for leisure, investment diversification, and lifestyle enhancements. One prominent trend to watch out for in 2025 is the perceptible increase in the shares of luxury housing within the overall residential market sales. As the economy stabilises and consumer confidence strengthens, affluent buyers are expected to gravitate towards high-end properties, contributing to a notable uptick in luxury real estate transactions. In conclusion, the luxury real estate segment in India is poised for growth in 2025, driven by evolving consumer preferences, technological advancements, and sustained demand for second homes. Developers and investors in this space must remain attuned to these trends and adapt their strategies to capitalise on the opportunities presented by the evolving landscape of luxury housing and second-home demand.
Sustained Growth Momentum Expected in Top 7 Cities Residential Real Estate Market
The residential real estate market in India is predominantly fueled by demand from end users necessitating the creation of a conducive environment to foster greater demand from this segment. According to ICRA forecasts, the area sold in the top seven cities of India is projected to experience robust growth in both FY2025 and FY2026. While FY2025 might see a slight dip in area sold due to lower launches, its projected to grow by 1-4% in FY2026. This growth is primarily attributed to the sustained strong demand from end-users and a healthy, albeit moderating, affordability factor. In FY2025, launches in these cities reached a decade-high, with a notable 12 per cent year-on-year increase, and are anticipated to rise further by 6-9 per cent in FY2026, reaching around 620-640 million square feet. Consequently, the replacement ratio is expected to surpass one time in both FY2024 and FY2025. In FY2025, launches are estimated to have declined sharply by 14-17% due to approval-related delays, following a record high of 701 million square feet in FY2024. The replacement ratio, measuring launches against sales over the past 12 months, remained at 1.0 times in the first nine months of FY2025 and is expected to stay at similar levels in FY2025 and FY2026. One notable trend driving this growth is the increased preference among homebuyers for larger living spaces. This shift in preference has led to a change in the overall segment-wise composition of sales across the top seven cities, with a rising share of the mid and luxury segments. As the real estate market continues to evolve, developers in these cities are expected to cater to the evolving demands of end-users by focusing on providing spacious and well-designed residential units. Additionally, affordability remains a key factor influencing purchasing decisions, prompting developers to offer competitive pricing and attractive payment plans to attract potential buyers. The residential real estate market in the top seven cities of India is poised for sustained growth in the coming years, driven by strong end-user demand and favourable market conditions. Developers and investors should capitalise on this momentum by adapting their strategies to align with the changing preferences of homebuyers and the evolving dynamics of the market.
Innovating Affordable Housing for Enhanced Living Experiences
The real estate sector has witnessed significant transformation driven by technological advancements such as home automation and artificial intelligence tools. As we look ahead to 2025, experts anticipate a surge in realty growth fueled by greater acceptance of innovation and technology. One prominent trend emerging in the residential real estate market is the increasing focus on affordable housing solutions that offer enhanced living experiences. Homebuyers, particularly in the mid-segment, are aspiring for luxurious living amenities and unique experiences at affordable price points. Innovations in technology are playing a pivotal role in shaping the future of affordable housing. Home automation systems, powered by gadgets and AI tools, are revolutionising the way residents interact with their homes. From smart lighting and temperature control to automated security systems, these advancements are enhancing convenience, comfort, and security in affordable housing developments. In 2025, we anticipate a growing demand for affordable homes that offer luxury features and amenities while maintaining affordability. Homebuyers are seeking properties that are centrally located and well-connected, providing easy access to essential amenities and transportation networks. Developers are responding to this demand by incorporating innovative design elements and technology-driven solutions into their affordable housing projects. From eco-friendly construction materials to energy-efficient appliances and digital concierge services, these developments aim to deliver a better lifestyle experience for residents without compromising on affordability. The convergence of innovation and affordability is driving a new era of residential real estate development in India. By leveraging technology and embracing innovative design concepts, developers have the opportunity to create affordable housing solutions that cater to the evolving lifestyle preferences of homebuyers in 2025 and beyond.
Steady Surge in Demand Forecasted for Commercial Realty and Office Market in 2024
The office market in India has been actively seeking innovative strategies to enhance absorption rates, consistently striving for expansion and improvement. As we approach 2024, experts foresee a continued upsurge in demand for commercial real estate and a thriving office market characterised by innovation and growth. In the upcoming year, the office market is poised for consolidation on strong foundations, reflecting stability and resilience. Occupier needs are anticipated to evolve, prompting market offerings to realign themselves accordingly. The Indian economys robust growth prospects and favourable domestic outlook will bolster occupier and developer confidence, contributing to sustained demand in the office sector. Demand-supply equilibrium is expected to keep vacancy levels within a manageable range, providing potential for rental upside. With rising capital investments, increased manufacturing output, and supportive government policies, the industrial and warehousing sector is projected to experience substantial growth momentum. Advancements in technologies such as Artificial Intelligence (AI) and the Internet of Things (IoT) will drive the proliferation of smart and automated warehouses, reshaping the landscape of industrial and warehousing facilities. Furthermore, experts anticipate significant growth in the flex segment, with projections indicating the leasing of more than 1.5 lakh seats, surpassing the 1.45 lakh level achieved in 2023. The flex demand is closely linked to the emphasis on enhancing employee experience, making it an integral part of occupier strategies. 2024 is set to witness a consistent upsurge in demand for commercial real estate and office spaces in India. With a focus on innovation, expansion, and enhanced occupier experiences, the market is poised for steady growth and evolution in the year ahead. Developers, occupiers, and investors alike stand to benefit from the opportunities presented by the dynamic commercial real estate landscape in 2024.
Opportunities
- The real estate sector shows promise with a projected 9.2% CAGR from 2023 to 2028. 2024 is expected to drive growth with urbanization, rental market expansion, and property price appreciation. - Private market investor, Blackstone, which has significantly invested in the Indian real estate sector (worth Rs. 3.8 lakh crore (US$ 50 billion), is seeking to invest an additional Rs. 1.7 lakh crore (US$ 22 billion) by 2030. - Firstly, with inflation under control, RBI may not increase the repo rates any further rather it is quite likely that it may reduce it in its next monetary policy, making home loans slightly cheaper. - Secondly, there has been robust land acquisition across the top 7 cities, indicating strong vibrancy in the market. Many Tier 1 developers have a strong pipeline of new launches in the coming quarters. This is largely because they are recording robust sales across their projects. In fact, the unfettered demand for housing across the country has also enabled the top 8 listed developers to reduce their net debt by 43% over the past three years, from 40,500 crore in FY20 to 23,000 crore in FY23. This decline in net debt is essentially because of the boosted sales and revenues collected by these listed developers. These developers? sales volumes have surpassed pre-pandemic levels and are headed for a new peak. With improved cash flows over the last few years, their debt has thus reduced significantly. - Other parameters including the stock market etc. also reflect positive trends which in a way are likely to positively impact the residential market. - Thus, going forward, we anticipate residential demand to remain steady and be driven primarily by the end users, which will inevitably prevent any unnatural speculative spikes. Grade A developers will continue to dominate the residential market and gain more market share, which will help your Company in creating opportunities to grow further.
Threats and Challenges
The real estate industry faces various threats and challenges that can impact its operations, profitability, and growth prospects. Here are threats and challenges:
- Economic Volatility and Market Fluctuations:
Real estate industries often navigate uncertain waters in a world where economic conditions can change rapidly. Economic downturns and fluctuations can lead to decreased property demand, stagnant property values, and increased competition among real estate businesses. With global economic uncertainties, inflation, and fluctuating interest rates, Indian real estate in 2025 faces market volatility. Investor sentiment is highly dependent on economic stability, making long-term planning and investments riskier than before.
- Regulatory Hurdles and Legal Complexities:
The introduction of the Real Estate (Regulation and Development) Act (RERA) was meant to bring transparency, but compliance challenges persist. In Indian real estate in 2025, delays in approvals, evolving tax structures, and frequent amendments in policies continue to create obstacles for developers and investors.
- Technological Disruption and Innovation:
The rapid advancement of technology is transforming the real estate industry, revolutionising how properties are listed, marketed, and transacted. Real estate professionals who fail to adopt to these change risk falling behind their tech-savy competitors.
- Rising Costs and Affordability Concerns:
The increasing cost of land, construction materials, and labor has made homeownership more expensive. In real estate in India, developers struggle to balance affordability while maintaining profitability. Middle-income and first-time homebuyers find it difficult to access reasonably priced housing in metro cities.
- Changing Consumer Preferences and Expectations:
As demographics and societal preferences evolve, real estate industries must adapt to meet the changing needs of consumers. Modern homebuyers and renters increasingly seek properties that offer energy efficiency, smart home features, and sustainable design.
The real estate industry is marked by its resilience and adaptability in facing challenges. Embracing innovation, fostering transparency, and prioritising sustainability are key strategies enabling the industry to overcome obstacles, thrive, and flourish in an ever-changing market.
Internal Control System
- The company has established a robust internal financial control system that aligns with the size, and complexity of its operations. It has implemented sufficient controls, procedures, and policies to ensure the efficient conduct of business operation, including adherence to policies and protection of assets. There is structural framework in place to prevent and detect frauds and errors, as well as to maintain the accuracy and completeness of accounting records.
- To maintain the integrity of its financial statements and mitigate the risk of malpractice, the company has designed appropriate frameworks for internal control over financial reporting. Key processes and policies undergo periodic reviews to assess the adequacy of control in place. Additionally, the company has established an internal Audit function led by the Chief Internal Auditor. The internal audit function plays a crucial role in evaluating and enhancing internal controls. Each financial year, the Audit Committee approves the Internal Audit plan, ensuring that audit activities are aligned with strategic objectives and risk management priorities.
- Financial Control System-
The company has established a robust internal financial control system that matches its operational scale and complexity. This system includes controls, procedures, and policies aimed at ensuring orderly and efficient business conduct.
- Adherence to Policies-
There are measures in place to ensure adherence to company policies, safeguarding of assets, and maintaining accuracy and completeness of accounting records. This is crucial for preventing and detecting frauds and errors.
- Internal Control over Financial Reporting
Specific frameworks have been designed to maintain internal controls over financial reporting. This helps ensure the integrity of Company?s financial statements and minimizes the risk of malpractice.
- Internal Audit Function
The Company has established an Internal Audit function, led by an Internal Auditor. This function is responsible for independently evaluating the adequacy and effectiveness of internal control.
Cautionary Statement
This management discussion and analysis contain forward looking statements that reflects your Company?s current views with respect to future events and financial performance. Important factors that could make a difference to the Company?s operations include labour and material availability, and prices, cyclical demand and pricing in the Company?s principal markets, changes in government regulations, tax regimes, economic development within India and other incidental factors.
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