India’s residential real estate market continues its strong upward trajectory, with listed developers once again outperforming the broader industry.
According to Pankaj Kumar, VP & Analyst – Fundamental Research at Kotak Securities, residential real estate companies under their coverage delivered another robust quarter in Q2FY26, clocking an impressive 43% year-on-year growth in pre-sales.
The momentum in the first half of the fiscal year remained equally strong, with H1FY26 pre-sales rising 44% year-on-year, already achieving 53% of the full-year target of approximately Rs 1.4 lakh crore, which itself represents a healthy 20% annual growth outlook.
Kumar notes that this strong performance was led by major developers such as DLF, Godrej Properties, Sobha, and Prestige Estates, all of which continue to see solid demand across key markets.
This stands in sharp contrast to the broader industry, which recorded a more modest 11% year-on-year sales increase in Q2FY26.
Importantly, he highlights that this industry growth was entirely price-led, as volumes remained flat at 23.6 crore sq. ft. Among major real estate markets, Bengaluru and Hyderabad bucked the trend with volume growth of 24% and 11% year-on-year, respectively, while MMR and NCR saw volume declines of 10%.
Inventory conditions remain healthy. As Kumar points out, the national inventory stands at just 1.6 years of trailing sales, indicating comfortable supply levels and disciplined new launches by developers. This discipline has been a major contributor to the sector’s price stability and rising pre-sales.
Looking ahead, Kumar says demand in the high-end residential segment may see moderate cooling, largely due to the sharp price increases of recent quarters and a softer sentiment among buyers linked to the IT sector.
However, he reiterates that the medium-term outlook for the housing cycle remains strong, supported by favourable demographics, rising incomes, and a structural shift toward branded, organised developers.
Valuations across leading players also remain attractive. As per Kumar’s analysis, developer stocks trade at 7–11x adjusted EV/EBITDA (2027E), which he considers reasonable given the sector’s earnings trajectory, ongoing market share gains of listed players, and their expansion into newer micro-markets.
In terms of stock preferences, Kotak Securities remains constructive on the sector. Kumar highlights DLF (BUY, Fair Value Rs 1,020) and Lodha (BUY, Fair Value Rs 1,455) as top picks, while also maintaining a positive view on Prestige Estates (ADD, Fair Value Rs 1,900).
With fundamentals strengthening and leading developers consistently outperforming the wider market, the residential real estate segment continues to offer compelling medium-term opportunities for investors.
Source: https://economictimes.indiatimes.com/