Mark to Market | Price hikes may hit realty demandPrice hikes may hit realty demand

harsha.j@htlive.com

The pace of new residential project launches is poised to improve, especially in the second half of FY26 (H2FY26), as approval delays ease. So far in the September quarter (Q2FY26), some listed developers have unveiled new projects. In July, DLF Ltd launched West Park project in Andheri, Mumbai; and Brigade Enterprises Ltd launched Brigade Avalon in Bengaluru. In August, Godrej launched Godrej Regal Pavilion Rajendra Nagar, Hyderabad; and Brigade launched another project Brigade Lakecrest in Bengaluru. A recent channel check by Nomura Global Markets Research said in September, Godrej Properties is expected to launch Godrej Sora Sector 53, Gurugram; and Sobha could see one or two launches (Sobha Magnus, Sobha Scarlet) in Bengaluru.

Listed developers are eyeing 18-20% year-on-year growth in pre-sales/bookings in FY26. Timely launches are crucial to meet this target. The June quarter (QIFY26) performance was solid. "Listed developers witnessed their best ever quarter, with aggregate pre-sales of ₹43,200 crore (up 45% year-on-year), achieving 31% of the targeted ₹1.4 trillion (up 20% year-on-year) and gaining further market share," said analysts from Kotak Institutional Equities.

The bookings momentum in QIFY26 was largely driven by the launches of The Prestige City by Prestige Estate Projects in Indirapuram and DLF's Privana North. However, overall industry-level launches were lower, 12% year-on-year and 5% sequentially at 229 million square feet in QIFY26, said Kotak.

High demand for luxury/premium housing continues to fuel the premiumisation and consolidation trends in the sector. While that has aided the realizations of developers, it is expected to worsen affordability for prospective buyers, hurting demand. Average residential prices in India's top seven cities rose 6% to 27% year-on-year in the June quarter, with the National Capital Region and Bengaluru seeing steep surges, according to Anarock Property Consultants.

Dearer land acquisitions could also be a problem for the sector's business development activities, which have been robust lately. It is crucial to strengthen the launch pipeline and spur pre-sales. Due to healthy cash flows and a strong balance sheet, following the sector's fund-raising spree, large companies have been buying land beyond core markets to boost market share and reduce concentration risk. "Rising land prices will make new business development more selective and challenging," said Anuj Puri, chairman, Anarock Group.

Major infrastructure projects have led to a spike in land prices. For instance, the expressway and the new international airport pushed land prices higher along the Yamuna Expressway in Delhi-NCR in recent years. In 2019, the average land prices here were ₹1,600/sq. ft and have touched ₹6,500/sq. ft in H12025-end, according to Anarock. In the same span, the Devanahalli region near Bengaluru International Airport saw land prices jump from nearly ₹2,200/sq. ft to ₹7,300/sq. ft Lodha Developers and Godrej Properties are expanding presence in Bengaluru and Hyderabad; Sobha is gaining a foothold in Noida and Mumbai.

But easing supply-side issues is not enough to revive realty stocks. The Nifty Realty index is down 16% in 2025 so far. Limited inventory in existing projects makes customer response to new launches crucial. Also, the secondary impact of tariffs on India's real estate remains to be seen, cautions Nomura. Layoffs in the IT sector due to tariff-led uncertainty are also a potential downside risk to real estate demand.