Robust First Half Sets Positive Tone for Indian Real Estate
The first half of fiscal year 2026 (H1FY26) delivered impressive results for India's listed real estate sector, with pre-sales growth reaching significant heights. According to data from Kotak Securities, residential realty stocks under their coverage witnessed a substantial 43% year-on-year increase in pre-sales during the September quarter (Q2FY26). When looking at the entire first half, the growth was even more remarkable at 44% year-on-year, achieving 53% of the full-year target of approximately ₹1.4 lakh crore.
This impressive performance was primarily fueled by healthy customer response to existing projects rather than aggressive new launches. The second quarter saw selective project introductions, including DLF Ltd's maiden venture in Andheri, Mumbai, and new offerings from Godrej Properties Ltd. The market demonstrated strong appetite for quality developments from established players, continuing the trend of sector consolidation that accelerated post the Covid-19 pandemic.
Accelerating Launches and Market Dynamics
The narrative is expected to shift in the second half of FY26 as the pace of new launches accelerates with gradually improving approval processes. Recent channel checks by Nomura Global Markets Research revealed strong demand for projects launched in October or scheduled for November launches.
The Nomura report dated 9 November highlighted several projects receiving excellent market response, including Prestige Estates Projects Ltd's Mira Road Project in Mumbai, Sobha Ltd's Magnus in Bangalore, Brigade Enterprises's Gateway Tower 2 in Hyderabad, and Aditya Birla Real Estate's Sector 71 project in Gurugram. This indicates continued consumer interest in new offerings across multiple metropolitan markets.
Major listed developers including Godrej Properties, Lodha Developers Ltd, DLF, and Prestige Estates have maintained their FY26 pre-sales growth guidance of 18-20%. Market expectations suggest most players will successfully meet these targets, though the days of extraordinary growth rates appear to be moderating.
Future Outlook and Potential Challenges
Industry analysts caution that the sector's pre-sales growth trajectory faces several headwinds. An Antique Stock Broking report from 18 November noted that with the growing base during the current upcycle, the exceptional pre-sales growth of the last three years—which recorded a compound annual growth rate (CAGR) of 33%—is unlikely to continue over the next three years.
The report projected that companies such as Brigade Enterprises, Godrej Properties, and Lodha Developers might deliver a more moderate 15-20% CAGR over the coming three years. Meanwhile, geographically concentrated players like Oberoi Realty Ltd and DLF, despite holding significant land parcels, are expected to experience more staggered pre-sales growth.
Several concerns linger in the market landscape. Weakening demand for high-end and premium residential properties remains a worry, particularly due to softening sentiment among potential buyers linked to the IT sector. Additionally, elevated home prices could impact customer affordability, potentially adversely affecting developers' pre-sales performance in the medium term.
At the broader industry level, Q2FY26 pre-sales saw a more moderate 11% year-on-year increase, driven entirely by higher prices as volumes remained flat at 23.6 crore square feet, according to Pankaj Kumar, Vice President & Analyst, Fundamental Research at Kotak Securities.
Regional market performance showed variation, with Bengaluru and Hyderabad posting healthy volume gains, while the Mumbai Metropolitan Region and the National Capital Region experienced declines. Listed realty companies are actively pursuing land acquisitions to expand their portfolios and gradually venturing into newer geographies, with business development activities expected to remain robust in H2FY26.
Financially, many listed developers currently maintain comfortable debt levels owing to healthy collections and funds raised earlier. However, the stock market performance tells a different story, with the Nifty Realty index declining approximately 13% in the current calendar year compared to positive returns by the Nifty 50.
The future trajectory of realty stocks will largely depend on the absorption of new projects and the performance of the upcoming launch pipeline. Market participants will closely monitor whether the current level of customer interest in new projects sustains through Q4FY26, particularly given the high base effect and emerging sector challenges.
