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Strong traction in aspirational segment    

In Q3FY26, luxury (ATS >INR 30mn) sales volume increased 11% QoQ and 2% YoY for tier 1 cities. This was aided by strong traction in the aspirational segment (ATS of INR 30-50mn) segment clocking 10% / 9% / 17% higher volume growth QoQ / YoY / versus past two years’ average respectively. Notably, the luxury segment has continued to post YoY growth every quarter (22 quarters) since Covid. This compares with overall industry sales volumes (tier 1 cities), flat QoQ down 10% YoY led by 27% YoY contraction in affordable (< INR 10mn) segment volumes. Mid income sales volume came-in flat QoQ and YoY. Inventory overhang across markets is broadly stable QoQ, with notable improvement (down two months) in Noida / Greater Noida, aided by absorption volume, up 50% QoQ / 60% YoY and accounting for ~40% of NCR absorption, up 7ppt QoQ and 2x YoY. Absorption volume and value market share for large, organized players rose 100bps in FY26 (YTD Jan ’26) versus FY25. Take rate for new launches by listed firms in Q3FY26 outperformed the industry by 10ppt in tier 1 cities, reflecting strongly on market share gains. Notably, 9MFY26 presales of listed players rose 14% YoY, outperforming industry growth (value) of 5%, while collections growth of 17% YoY reflected strongly on execution. Overall, inventory overhang for listed players was at 12 months, while for unlisted was at 18 months.

New project additions by key listed players rose 18% QoQ to INR 680bn in Q3FY26, translating to ~INR 2tn of new projects in 9MFY26. Notably, the ratio of new business development (BD) / presales is sustaining at ~1.5x for 9MFY26, reflecting positively on the anticipated demand and medium-term earnings growth. Our top picks in the space are Oberoi Realty (OBER IN), Godrej Properties (GPL IN) and Sobha (SOBHA IN).     

Aspirational segment aiding luxury sales, led by Gurugram, Hyderabad and Pune: Absorption volume in tier I cities for the aspirational segment rose 10% / 9% / 17% QoQ / YoY / versus past two-year average respectively. This was aided by three markets – Gurugram, Hyderabad and Pune registering growth across periods in Q3FY26. A key highlight is Gurugram, where the share of aspirational segment in both supply and absorption rose to 60-70% of overall luxury versus 40% average in the past eight quarters, implying that the focus of industry participants is shifting to affordability and end-user demand. Overall, luxury absorption volume rose 11% QoQ and 2% YoY with Noida / Greater Noida as the top performer (up 2x QoQ; 74% YoY) and followed by Pune (up 37% QoQ; 25% YoY). Notably, premium and luxury housing continued to account for a lion’s share (~80%) of new business developments (BD) of >300mn sqft by listed players in FY25-Q3FY26 with gross development value (GDV) of ~INR 4.3tn. Absorption volume in mid income segment was flat QoQ and YoY, with strong growth traction in both Navi Mumbai and Noida / Greater Noida across periods. In the affordable segment, new supply to total absorption continued to trend at <90%, implying inventory adjustment by industry players.  

Industry sales velocity trending inline with last 8 quarters average with Bengaluru / Hyderabad relatively underperforming while MMR / Chennai outperforming: New launches in Bengaluru / Hyderabad saw take rate declining by ~800bps / 300bps respectively versus two year average. MMR / Chennai saw a 300bps improvement versus the same period, while Pune was stable. Reduced speculative activity in NCR saw take rate drop by 200bps versus past two years’ average. Overall, the take rate in tier I cities for the industry in Q3FY26 is stable listed firms’ clocking 10ppt higher vs. industry.

Office activity riding high; retail vacancies broadly stable: The office markets saw both gross leasing and net absorption up 3-5% QoQ and trending 7-9% above past four quarters’ average run-rate for the top six markets. Notably, Bengaluru and Hyderabad witnessed a sharp rise in both net absorption and gross leasing. Vacancies across markets posted an improving trend QoQ except Pune (up 1.4ppt). In the retail segment, NCR was a key notable witnessing a sharp increase in vacancy of 3.3ppt QoQ. retail consumption in Q3FY26 at mall assets of listed firms – Phoenix Mills and Nexus Trust REIT – rose 25% YoY and 15% YoY (+9% YoY like-for-like for Nexus Trust), respectively.

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