New Delhi, Sep 1 (IANS) India’s real estate sector requires nearly Rs 50,000 billion of capital over the next decade as the sector is expected to grow to a $1 trillion market by 2030, a report said on Tuesday.
The report from Brickwork Ratings (BWR) forecasted revenue growth to recover to 5.5 per cent in FY27, supported by strong demand for luxury housing.
The credit outlook for the real estate sector remains stable, even as revenue growth eases to -0.2 per cent in FY26 from 15.8 per cent in FY25.
The sector continues to benefit from a 31 per cent YoY increase in residential sales across leading cities and 10 per cent-12 per cent luxury housing price appreciation in FY25.
However, price volatility across residential and commercial properties, rising construction costs and a strategic shift towards mid-income housing are weighing on near-term revenue growth.
Operating margins are expected to improve to 32 per cent in FY26 from 30.1 per cent in FY25, before stabilising at 33.3 per cent in FY27. The improvement is expected to be supported by inventory clearance and a greater contribution from higher-margin premium residential projects, data centres and warehousing spaces.
Financial resilience remains supported by low gearing among top-tier developers, who increasingly rely on joint development agreements rather than heavy debt.
Strong pre-sales collections, private equity funding and REIT listings are also helping developers manage liquidity and leverage.
Interest coverage is expected to remain steady at 2.8-fold in FY26, while the debt service coverage ratio is projected at 1.1-fold, providing financial headroom despite higher construction borrowing and mezzanine funding requirements.
The firm flagged unsold inventory as a concern, with Mumbai and Pune carrying housing stock equivalent to over 30 months of sales, potentially delaying new project launches and pressuring cash flows.
Refinancing requirements also remain vulnerable to movements in interest rates.
Residential development is expected to command the larger share of the real estate sector’s capital requirement, given its weight in overall sector activity, while commercial real estate continues to draw a disproportionate share of near-term institutional capital.
—IANS
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