Resilient Residential and Thriving Commercial Real Estate in India

Mixed Performance from Listed Players for Q3FY26

Strong updates from leading real estate players were reported in Q3FY26. Sobha Developers saw a 52% year-over-year (yoy) and 11% quarter-over-quarter (qoq) growth in pre-sales, reaching ₹2,115 crore. Lodha Developers experienced a 25% yoy and 23% qoq increase in pre-sales, totaling ₹5,620 crore. Godrej Properties reported a 55% yoy increase in pre-sales, though it saw a 1% qoq decline, amounting to ₹8,421 crore. Prestige Estate Projects also saw a 39% yoy increase in pre-sales, although this was a 31% qoq decrease, totaling ₹4,184 crore.

However, not all companies fared well. Oberoi Realty reported a 56% yoy decline and a 36% qoq decrease in pre-sales, reaching ₹836 crore. DLF’s pre-sales dropped significantly by 97% yoy and 90% qoq, totaling ₹419 crore. These declines were primarily due to delays in new project launches and reduced sales velocity in ongoing projects, especially in the highest-ticket size projects.

Financial Results

Oberoi Realty reported consolidated revenues up 6% yoy at ₹1,493 crore, driven by a 33% yoy increase in rental income to ₹301 crore. Residential revenue booking remained flat yoy at ₹1,107 crore. The company’s consolidated EBITDA margins stayed flat at 57.4% qoq, supported by higher margins in rental and hospitality sectors. Adjusted PAT increased 4% yoy but decreased 15% qoq to ₹646 crore. The stock has seen a 23% correction over the trailing seven months.

DLF posted consolidated revenue of ₹2,020 crore, driven by higher revenue booking. However, gross margins and EBITDA margins declined by 905 bps and 687 bps yoy to 42.7% and 19.3%, respectively. Consequently, consolidated EBITDA fell 2.5% yoy but rose 37.5% qoq to ₹390 crore.

Residential Market Steady in 2025

India’s top eight cities witnessed a 1% yoy decline in sales in 2025, with sales totaling 3.48 lakh units. While NCR, Pune, and Kolkata saw declines of 9%, 3%, and 3% yoy, respectively, Chennai, Hyderabad, Ahmedabad, and Mumbai recorded increases of 12%, 4%, 2%, and 1% yoy. Bengaluru’s sales remained flat. Sales growth across ticket sizes, particularly in the ₹1-2 crore, ₹2-5 crore, ₹5-10 crore, ₹10-20 crore, and ₹20-50 crore ranges, were up 7%, 20%, 31%, 164%, and 55% yoy, respectively, reflecting continued aspirational buying behavior. Properties priced above ₹1 crore accounted for about half of the sales, growing 14% yoy, while sub-₹50 lakh properties saw a 17% yoy decline and comprised 21% of the market. Key residential markets, including NCR, Hyderabad, Bengaluru, and Mumbai, saw price increases of 19%, 13%, 12%, and 7% yoy, respectively.

Commercial Housing Remains Upbeat

The commercial real estate sector saw record leasing of 86.4 million square feet (msf) in 2025, up 20% yoy. Global Capability Centres (GCCs) accounted for 38% of total office space absorption at 31.8 msf. The outlook for 2026 is even more promising, driven by the technology sector, robust growth in flexible workspaces, and GCCs expected to comprise 35-40% of total absorption.

Budget Expectations for Real Estate

The real estate sector has several expectations from the upcoming budget to boost growth: - Affordable Housing Definition : Increase the definition of affordable housing in terms of value and unit sizes, currently set at 60 sq mtrs and ₹45 lakh in metros and 90 sq mtrs and ₹45 lakh in non-metros. - Home Loan Interest Deduction : Raise the home loan interest deduction limit from the current ₹2 lakh to ₹4-5 lakh. - GST Rationalization : Reduce the GST on construction contracts from 18% to preferably 5%. - Credit Access for Developers : Expand credit access by allowing External Commercial Borrowings (ECB) funding, which is currently restricted to integrated townships, industrial parks, and SEZs. - Incentives for GCCs : Introduce a 15% tax rate and reintroduce tax holiday benefits, such as for 10 years for new units. - Rental Housing Promotion : Provide tax exemptions for rental income and tax holidays for developers to increase rental supply.

View and Stock Recommendations

The commercial real estate segment remained a bright spot in 2025 and is expected to stay strong in 2026. The residential market is anticipated to remain mixed, with larger and organized developers benefiting from consolidation. However, sharp price rises in markets like NCR, Hyderabad, and Bengaluru may slow down sales velocity. Most realty stocks have corrected over the trailing year by 15-35%, with Phoenix Mills being an outlier with gains of about 16%. Our preferred stocks in the large-cap space are Oberoi Realty, Phoenix Mills, and Brigade Enterprises, while Mahindra Lifespaces and Arvind Smartspaces are our picks in the mid-cap space.