Keystone Realtors Ltd Management Discussions

As a result, the inventory overhang, which measures the time required to clear existing stock at the current pace of sales, improved to thirteen months. This figure represents a notable improvement from sixteen months in 2023 and more than twenty months in the period before the pandemic. The current inventory levels reflect a balanced market environment, where strong demand is efficiently absorbing new supply.

Regional Supply Trends

The year also witnessed notable variations in new supply trends across major metropolitan areas. While most cities maintained a steady pipeline of new projects, certain historically high-supply markets such as Pune, Thane, and Hyderabad experienced a combined 34% decline in new launches. In contrast, Bengaluru demonstrated resilience, recording a 27% year-on-year increase in new project supply and emerging as the leading city for fresh launches. The Delhi NCR region also saw a resurgence, surpassing Mumbai in annual new supply for the first time since 2018.

Despite these regional shifts in supply, demand remained strong across all major markets, ensuring that absorption rates kept pace with, or even exceeded, new additions. Over the past two years, sustained demand momentum has meant that new launches have generally trailed or matched sales, effectively preventing any build-up of excess inventory.

Overall, the combination of strong absorption fundamentals and calibrated supply has maintained market equilibrium. The current environment, characterised by buoyant demand and prudent supply management, continues to support a stable and healthy residential real estate sector in Indias leading cities.

Price Trends and Inventory

Residential property prices maintained an upward trajectory throughout FY24, driven by capital value appreciation and a shift towards a higher-end product mix. Across the leading cities, the weighted average prices of sold units increased at a mid to high single-digit rate on an annual basis. Industry indices indicate an average year-on-year increase of approximately 8 9% in house prices during 2024.

Several major markets experienced even stronger momentum, with Bengaluru and Delhi NCR recording notable year-on-year price growth of around 16% and 12%, respectively, as at early 2025. Developers in numerous cities have confidently executed multiple rounds of price increases in new project phases, responding to sustained end-user demand and a reduction in available ready inventory.

Furthermore, market health has remained robust despite the sustained price increases, owing to a significant improvement in the inventory situation. The reduction in unsold stock throughout 2023-24 has brought inventory levels down to multi-year lows. By the end of 2024, the combined unsold inventory across Tier-1 cities stood at approximately 504,000 units, reflecting a decline of around 10% compared to the previous year.

This inventory now equates to roughly a years worth of sales (13 months), marking a substantial improvement from the inventory overhang of two to three years observed during the mid-2010s. The current low inventory pressure has enabled developers to maintain pricing power and implement gradual price increases without adversely affecting demand.

Infrastructure as a Growth Catalyst

The Governments sustained push on infrastructure is evident in fiscal priorities: the central capital expenditure on infrastructure has more than tripled over the past decade, rising from about 0.6% of GDP in FY15 to nearly 2.0% of GDP in FY2025. In the latest Union Budget ofFY25, allocation for infrastructure development was increased by a further 11% YoY, reflecting a strong commitment to build roads, railways, urban transit and more. In fact, infrastructures share of total government capex has swelled from 33% in FY2015 to about 61% in FY25. This unprecedented public investment in infrastructure is laying the groundwork for the next phase of real estate growth.

Improved infrastructure directly boosts real estate prospects by enhancing accessibility and reducing travel times, thus making outlying locations more viable for residential projects. Major programs like Bharatmala Pariyojana and the National Infrastructure Pipeline are expanding transport links across the country. Metro rail networks in cities like Mumbai, Delhi, Bengaluru, and Hyderabad are undergoing massive expansion, connecting suburbs to city centres. New airports and freight corridors are coming online, and the governments focus on railway modernisation aims to drastically cut logistics costs. All these initiatives are expected to spur the growth of satellite towns and peripheral suburbs. As the Knight Frank "Decade from Now" study points out, we are witnessing "new destination" development in the form of satellite centres around Tier-1 metros. For instance, improved highways and transit routes around Delhi NCR, Mumbai and Bangalore have led to booming residential clusters in those corridors. The consequence of this multi-dimensional infrastructure growth is a virtuous cycle: businesses and jobs move outward, housing demand in those new pockets rises, and nascent asset classes like logistics parks and data centers also get a boost.

Infrastructure will remain a cornerstone of real estate development. The government has signaled a continued focus beyond FY25, with policies targeting further increase of infrastructure spending as a percentage of GDP. This is crucial because as cities expand and new economic nodes emerge, adequate infrastructure is needed to support real estate growth. The alignment of infrastructure planning with urban expansion (e.g. new expressways linking city outskirts, dedicated industrial corridors with housing for workers, smart city missions, etc.) will likely create new growth avenues for the residential market.

Indias aggressive infrastructure build-out is catalysing housing demand by making more locations liveable and by driving economic growth. The residential sector stands to be one of the chief beneficiaries of this massive infrastructure push, enjoying both direct demand stimulation and ancillary benefits from the modernisation of Indias connectivity landscape.

Outlook for FY25 and Beyond

The outlook for Indias residential real estate market is resoundingly positive. The optimism stems from multiple factors including, historically low inventory, buoyant consumer sentiment, and an improving financial environment for homebuyers. After a phase of rising interest rates, the cycle is turning benign. The Reserve Bank of India effected its first policy rate cut in early 2025 (25 bps in Q1) as inflation eased to multi-year lows (~3.6%). Lower inflation and interest rates, alongside measures to infuse liquidity into the banking system, are set to reduce mortgage costs and improve credit availability.

This macro tailwind should further stimulate housing demand, especially at the affordability margin. Indeed, despite worries of an overheated market last year, the stable sales in Q1 2025 (+2% YoY nationally) indicate that end-user demand remains intact and may accelerate with easier financing. Beyond the current fiscal year, the medium-to-long term outlook (FY26 FY30 and beyond) for the Indian residential market is fundamentally robust. The countrys economic and demographic fundamentals form a strong foundation for sustained housing demand. India is projected to remain one of the fastest-growing major economies, with GDP growth in the 6 7% range annually over the next few years. Such growth, coupled with rising per-capita incomes, will continue to feed the aspiration for home ownership. Demographic trends are particularly favorable. Indias population is young (median age ~31 by 2034) and urbanising rapidly. By 2034, the urban population is expected to reach ~42.5% of the total population. According to Knight Frank estimates, accommodating this urban expansion will require approximately 78 million new housing units between 2024 and 2034. This translates into an enormous pipeline of demand. The residential sector could generate an additional output equivalent to USD $906 billion over the next decade to meet housing needs. From a strategic perspective, key transitions underway will shape the sectors evolution in the coming years. First, the premiumisation trend is expected to persist, as consumer preferences for larger, higher-quality homes appear structural. Developers will continue aligning their product mix accordingly, which should support industry margins and value growth. Second, infrastructure-led growth will open up new geographies, as highways, metro lines, and smart-city projects come to fruition, the expansion of city boundaries will create fresh residential micro-markets and investment hotspots. This will geographically broaden the market and alleviate pressure on core city areas. Third, the institutionalisation and consolidation of the developer universe will likely deepen. Organised developers will continue to extend their market share gains. The establishment of a regulated, trust-driven investment environment (e.g. the maturation of REIT frameworks or introduction of similar vehicles for rental housing in the future) could further integrate long-term capital into the housing sector, improving transparency and professionalism. All these shifts point to a more resilient and organised market structure, which bodes well for sustaining investor confidence.

Mumbai Metropolitan Region Residential Market

The Mumbai Metropolitan Region (MMR) remained one of the most resilient and strategically positioned residential real estate markets in 2025. End-user demand continued to demonstrate strength, even amidst a shifting macroeconomic environment, supported by ongoing infrastructure enhancements, robust developer activity, and the acceleration of redevelopment initiatives. The ongoing shift in buyer preferences towards premium, well-connected residences further reinforced long-term confidence in the MMR market. The year was characterised by a measured expansion in both supply and demand, underpinned by urbanisation, rising household incomes, and increasing institutional maturity within the real estate value chain.

Sales and Launch Activity

MMR achieved residential sales of approximately 96,187 units in 2025, representing an 11% year-on-year increase and underscoring sustained buyer confidence. New project launches were closely aligned, totalling 96,470 units, which reflects a prudent balance between supply and demand. Sales activity was broad-based, with a notable rise in launch volumes across the western and central suburbs. Developers maintained discipline in their launch pipelines, ensuring that new supply was well-matched to market absorption capacity. This balanced approach has contributed to price stability and mitigated the accumulation of unsold inventory.

Inventory Trends and Absorption

The improvement in this metric over the year points to a market driven by genuine end-user demand. As inventory overhang has eased, developers have found it easier to secure funding and concentrate on timely project completion. Buyers have shown a clear preference for ready-to-move-in and near-completion properties, which has reduced risk perceptions and shortened transaction cycles.

Mumbais geographic constraints naturally limit the pace of new supply, making efficient inventory management essential for long-term stability. The current quarters-to-sell ratio supports price stability and ensures that supply growth remains closely aligned with demand.

Shift Towards Mid Premium and Luxury Segment

The Mumbai residential market witnessed a shift towards mid-premium and luxury housing, as developers responded proactively to evolving buyer preferences. Over recent years, there has been a marked increase in the launch of high-ticket homes, particularly in the above INR 20 million category. The share of such launches has more than doubled, rising from 8% in the first half of 2018 to 18% in the second half of 2024. This development highlights a clear focus on catering to affluent homebuyers who prioritise modern amenities and enhanced living experiences. Properties priced above INR 10 million have emerged as the dominant segment in the market, accounting for 34% of total residential sales in the second half of 2024. The INR 20 50 million segment, in particular, recorded a robust 34% year-on-year growth, reflecting sustained demand for high-value homes. In contrast, sales in the sub-INR 5 million category declined, a trend attributed to both limited supply and a broader market movement towards mid-range and luxury offerings. Launch activity has closely mirrored these sales trends. Developers have increasingly concentrated on the INR 20 50 million range, with this segments share of new launches rising from 12% in the second half of 2023 to 15% in the corresponding period of 2024. This alignment between supply and buyer demand highlights a strategic focus on larger, better-equipped homes that meet the expectations of a discerning clientele. Collectively, these trends illustrate a decisive transition in Mumbais residential landscape, with both developers and buyers gravitating towards mid-premium and luxury segments.

Enhancement

The Mumbai Metropolitan Regions real estate market continues to benefit from strategic infrastructure development initiatives that fundamentally enhance regional connectivity. The allocation of 29,000 crore for infrastructure projects demonstrates the governments commitment to positioning Mumbai as Indias premier real estate capital. These developments systematically create new micro-markets whilst substantially enhancing the value proposition of existing areas. The Mumbai Trans Harbour Link (MTHL), operational since 2024, has established transformative connectivity between Mumbai and Navi Mumbai, directly contributing to Navi Mumbais 22% increase in sales. The Mumbai Metro expansion programme continues to revolutionise urban mobility, with Metro Line 3 Phase 1 operational and multiple lines under construction, generating substantial property value appreciation in surrounding areas.

The Mumbai Coastal Road Project, with Phase 1 operational and Phase 2 under construction, delivers enhanced connectivity to Western suburbs whilst significantly reducing travel times. These infrastructure investments collectively improve transportation efficiency and create new real estate micro-markets, enhancing accessibility and reducing commute times for previously underserved areas.

These infrastructure developments will continue to drive real estate demand by improving connectivity, reducing travel times, and creating new investment opportunities across the MMR. The systematic completion of these projects positions the region for sustained property value appreciation and enhanced market accessibility.

Source: Business World, Economic Times, Housing News

Redevelopment and Urban Renewal Initiatives

The Mumbai Metropolitan Region is experiencing comprehensive redevelopment initiatives that are systematically transforming the urban landscape. The region currently maintains over 25,000 buildings across MMR eligible for redevelopment, representing an estimated project value exceeding 30,000 crore. This redevelopment programme creates substantial opportunities for both urban renewal and strategic real estate investment.

The redevelopment wave addresses critical urban challenges whilst generating modern housing stock that meets contemporary market requirements. These initiatives systematically replace ageing infrastructure with contemporary developments, enhancing both residential quality and commercial viability across the region.

The ongoing redevelopment programme will continue to drive market growth by replacing obsolete housing ows, stock with modern developments, creating premium real estate opportunities and enhancing the overall quality of the urban environment. This systematic urban renewal positions the MMR for sustained market expansion and value creation.

Economic Expansion and Employment Generation

The Mumbai Metropolitan Regions economic expansion continues to generate substantial employment growth, creating robust demand for residential and commercial real estate. The MMRs current GDP of 12 lakh crore ($140 billion) is targeted to double to 26 lakh crore ($300 billion) by 2030, as established by NITI Aayog. This ambitious target reflects the regions potential for sustained economic growth and systematic job creation. The region currently provides employment opportunities for one crore people, with the requirement to create 30 lakh additional employment opportunities to achieve the targeted economic expansion. This employment generation directly translates to increased housing demand across various income segments. The planned economic expansion will continue to drive real estate demand through sustained employment generation, income growth, and increased purchasing power. The doubling of GDP by 2030 positions the MMR for substantial residential and commercial real estate growth driven by fundamental economic strength.

Source: NITI Aayog, Business Today

Demographic Growth and Urbanisation Trends

The Mumbai Metropolitan Regions demographic expansion represents a fundamental driver of sustained real estate demand through continuous population growth and urbanisation. Mumbais population in 2025 is estimated at 22,089,000, representing 1.92% annual growth from the previous year. The metropolitan area experiences 1,000 migrants daily, with individuals and families seeking employment opportunities and subsequently establishing families, contributing to continued population growth.

Mumbais rapid economic growth has created employment opportunities across skill levels, from high-skilled to low-skilled positions. The demographic growth benefits from enhanced healthcare options and educational opportunities, sustaining continued migration flows and natural population increase. The sustained demographic growth will continue to drive real estate demand through consistent population fl household formation.expansion,migration This fundamental demographic strength ensures continued market demand across all housing segments and supports long-term market growth.

Affordable Housing and Policy Initiatives

The Mumbai Metropolitan Regions affordable housing initiatives represent a critical growth driver addressing diverse demographic needs and government policy objectives. The Maharashtra governments Housing Policy 2025 targets the construction of 3.5 million affordable homes by 2030, supported by a substantial investment commitment of 70,000 crore. This comprehensive policy specifically addresses economically weaker sections (EWS) and low-income groups (LIG), systematically addressing the critical housing shortage in the region.

The policy framework introduces innovative financing mechanisms and government support structures to accelerate affordable housing delivery whilst ensuring quality and accessibility for target demographics. The affordable housing initiative will continue to drive market growth by addressing the substantial housing deficit, creating volume growth opportunities for developers, and ensuring comprehensive market development across all income segments. This systematic approach to affordable housing ensures sustained market expansion and social development.

About the Company

Keystone Realtors Limited, widely recognised under the Rustomjee brand, is a leading real estate developer with a longstanding presence across the Mumbai Metropolitan Region (MMR). Since its inception in 1995, the Company has been dedicated to redefining urban living by delivering thoughtfully designed spaces and sustainable communities that resonate with the evolving aspirations of Mumbais residents.

Rustomjees core operations span the full spectrum of real estate development. The Company is renowned for its diverse portfolio of residential projects, including premium gated communities, integrated townships, and high-rise towers, each meticulously planned to foster a sense of community and enhance the quality of life for residents. These developments are distinguished by their contemporary architecture, sustainable building practices, and a comprehensive suite of amenities that support holistic well-being and encourage meaningful social interaction. A hallmark of Rustomjees business is its leadership in redevelopment, particularly within the dense urban micro-markets of Mumbai.

The Company partners closely with housing societies and landowners to revitalise ageing structures, transforming them into modern, efficient, and sustainable housing solutions. This approach not only addresses the citys pressing need for urban renewal but also ensures that residents benefit from upgraded living environments and improved infrastructure. Beyond residential offerings, Rustomjee actively develops commercial and mixed-use projects that seamlessly integrate retail, office, and leisure spaces. These projects are designed to create vibrant, self-sustained communities where residents can live, work, and engage in recreational activities within a single, thoughtfully planned environment. The Companys commitment to urban transformation is further reflected in its active participation in slum rehabilitation and urban renewal programmes, contributing to the creation of inclusive, quality housing and infrastructure for underserved communities.

Rustomjees reputation for quality, transparency, and timely delivery has established it as a trusted name in Mumbais real estate sector. With a robust pipeline of ongoing and planned developments, the Company is well-positioned to address the dynamic demands of the region, shaping the future of urban living while upholding its commitment to excellence and customer-centricity.

Financial Performance Review and Outlook

FY25 marked a significant year of progress and achievement for Keystone Realtors Limited. Operating in a dynamic real estate environment, the Company capitalised on sustained end-user demand and historically low housing inventory in the Mumbai Metropolitan Region. Throughout the year, Keystone, under the Rustomjee brand, delivered on its commitments by achieving record pre-sales, maintaining strong cash flows, and enhancing profitability. The residential real estate sector continued its positive trajectory, with the MMR experiencing healthy demand across all segments, supported by rising incomes, major infrastructure developments, and a growing desire for lifestyle upgrades. Inventory levels in key micro-markets reached multi-year lows, fostering a favourable pricing environment and accelerating sales velocity. Against this backdrop, Keystones operational performance was driven by strong traction in both ongoing and new projects, particularly in redevelopment-driven launches, where the Companys reputation and expertise translated into rapid sales and high customer confidence.

The Companys robust collections and prudent working capital management further reinforced its liquidity position, enabling it to comfortably fund ongoing construction and new investments. Keystones focus on an asset-light development model and its leadership in Mumbais redevelopment segment allowed it to optimise returns and minimise balance sheet risk. Strategic additions to the project pipeline, with a majority in the mid-income and aspirational housing categories, have provided multi-year revenue visibility and a strong foundation for future growth.

Looking ahead, Keystone remains well positioned to benefit from the structural upcycle in housing demand within the MMR. The Company will continue to advance its asset-light and redevelopment-focused strategy, supported by operational agility, disciplined execution, and a robust project pipeline. With a strong balance sheet and a dedicated team, Keystone is poised to capture emerging opportunities and deliver sustainable value to all stakeholders in the years to come.

Internal Controls

The Company maintains a comprehensive internal control framework that is rigorously aligned with the scale and complexity of its business operations. These controls are underpinned by well-defined policies and procedures, which are systematically documented to facilitate effective oversight of business performance and operational integrity.

Our information technology systems are fully integrated with core business processes, supporting the timely and accurate capture, processing, and reporting of data. This integration enhances operational efficiency, promotes data reliability, and ensures that management has access to relevant information for decision-making. To provide independent assurance on the effectiveness of internal controls, the Company engages a reputable external audit firm to conduct periodic reviews. These audits encompass an evaluation of the adequacy and effectiveness of the Companys internal controls, compliance with applicable policies, and adherence to regulatory requirements. The external auditors scope extends to both financial and operational controls, ensuring a holistic assessment of risk management practices.

In addition, the internal audit function operates independently and reports directly to the Audit Committee of the Board. Internal auditors perform regular assessments of key control areas, identifying opportunities for improvement and recommending corrective actions where necessary. Their findings and recommendations are presented to the Audit Committee, fostering a culture of transparency and accountability. The Audit Committee undertakes a thorough review of all internal audit reports and monitors the implementation of recommended actions. It is responsible for evaluating the ongoing effectiveness of the Companys internal control systems and making further recommendations to management as appropriate. This structured and continuous review process ensures that the Companys internal controls remain robust, responsive to emerging risks, and effective in safeguarding assets and maintaining the integrity of financial reporting.

Risk Management

Rustomjee maintains a comprehensive risk management framework designed to systematically identify, assess, mitigate, and monitor risks across all facets of its operations. The Companys approach is grounded in robust governance and proactive oversight, ensuring that emerging risks are addressed promptly and effectively.

Governance Structure

The Companys Risk Management Committee is composed of four members, including a Non-Executive Independent Director, two Executive Directors, and the Chairman and Managing Director. This Committee is entrusted with the responsibility of reviewing and guiding the Companys risk management strategy. Its mandate encompasses the formulation, oversight, and implementation of risk management policies and the business continuity plan. The Committee ensures that appropriate methodologies, processes, and systems are in place to monitor, evaluate, and address risks inherent in the Companys business activities. Regular reviews by the Board further reinforce comprehensive oversight and accountability.

Key Risk Areas

The principal risks identified as material to the Companys business are as follows:

INFLATION:

Escalating input costs may adversely affect profitability and the financial viability of projects.

SHIFTS IN CONSUMER PREFERENCES:

Evolving market trends and customer expectations can influence sales performance and project outcomes.

PROJECT DELAYS:

Delays in project execution and delivery may result in increased construction and maintenance expenses, impacting margins and customer satisfaction.

BRAND REPUTATION:

Any lapse in maintaining the Companys brand reputation could diminish market position and erode customer loyalty.

TALENT MANAGEMENT:

The ability to attract, develop, and retain skilled professionals is critical to sustaining operational efficiency and organisational growth.

CUSTOMER SATISFACTION:

Suboptimal customer experiences may lead to reputational harm and loss of future business opportunities.

FRAUD AND UNETHICAL PRACTICES:

Incidents of fraud or unethical conduct could compromise the Companys reputation and financial stability.

REGULATORY CHANGES:

Amendments to government policies or regulatory frameworks may affect business operations and compliance requirements.

Risk Mitigation Framework

Rustomjee addresses these risks through a structured and dynamic risk management system. This framework assigns clear ownership for the monitoring and mitigation of identified risks, ensuring accountability at every level. The Company has made significant investments in transparent, customer-centric processes and advanced IT infrastructure, which collectively support effective risk mitigation and operational resilience.

Corporate governance policies are rigorously enforced to uphold transparency in business conduct, facilitate timely disclosures, and ensure strict compliance with all applicable regulations. The Companys employee engagement initiatives and welfare programmes are designed to foster a supportive work environment, thereby reducing risks associated with talent acquisition and retention.

Through these measures, Rustomjee remains committed to safeguarding stakeholder interests and sustaining long-term value creation, while maintaining a proactive stance towards risk management in an evolving business environment.

Cautionary Statement

This report contains certain forward-looking statements, which are subject to inherent risks and uncertainties. Expressions such as ‘will, ‘shall, ‘anticipate, ‘believe, ‘estimate, ‘intend, ‘expect, and similar terminology, when used in relation to the Company or its business, are intended to denote such forward-looking statements. These statements are based on current expectations, assumptions, and projections regarding future events and business performance. Actual results, performance, or achievements may differ materially from those expressed or implied in these statements due to a variety of factors, including but not limited to changes in economic conditions, market dynamics, regulatory developments, and other unforeseen events. The Company assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future developments, or otherwise. Accordingly, readers are advised not to place undue reliance on these forward-looking statements, which speak only as of the date of this report.