Real Estate Sector in Consolidation Phase: Kotak's Arsiwalla

Murtuza Arsiwalla, Real Estate Analyst at Kotak Institutional Equities, believes the property market is in a consolidation phase rather than a downturn. He notes that previous housing upcycles lasted three to four years, followed by extended stagnation, suggesting the sector may already be a few years into such a phase. While peak growth may be behind, he expects stronger companies to continue performing well.

Speaking from the sidelines of Kotak Institutional Equities' Chasing Growth 2026 Investor Conference, Arsiwalla said, “The industry volumes are moderating, and therefore, even if companies are reporting good numbers, it's only a matter of time before their sales falter.”

Arsiwalla noted that company-level performance remains strong, even though the broader industry appears to be going through a phase of stagnation. Approvals have been cited by most developers as a bottleneck for new launches — and launches are critical to sustaining sales momentum. Some investors question whether approval delays are masking softer demand. Arsiwalla’s view is measured: time will reveal whether supply constraints or demand fatigue are the real issue.

What is undeniable, he says, is that listed players have delivered consistent numbers over the last six to seven quarters, even as broader industry volumes appear flatter. Among largecap names, he believes DLF and Brigade Enterprises stand out. Both have a meaningful annuity income component alongside residential development — something the market typically rewards in REIT structures but seems to be undervaluing within diversified developers.

Kotak remains constructive on these names, particularly as valuations reflect subdued expectations. The post-COVID residential upcycle began strongly, with three years of double-digit volume growth. Over the past two years, however, industry volumes have largely plateaued.

Arsiwalla frames the current phase as consolidation rather than collapse. Historically, India’s last property upcycle lasted about three to four years, followed by a prolonged five-to-six-year stagnation period. If that template holds, the sector may already be a couple of years into its consolidation phase.

Another overhang has been concerns around artificial intelligence and its potential impact on IT hiring — especially relevant for cities like Bengaluru, where several developers have significant exposure. Arsiwalla acknowledges that AI is now part of almost every macro conversation. However, the data from commercial real estate tells a different story — at least for now.

Quarterly office leasing has touched around 14 million square feet, with nearly 40 million square feet leased over nine months. That suggests corporate expansion and job creation are still ongoing. Even if traditional IT hiring moderates, Global Capability Centres (GCCs) continue to absorb space at a steady pace.