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The listed real estate universe had a healthy start to the year despite moderation in demand as rising home prices have made affordability a growing concern for buyers, which has impacted the performance of broader industry. 1QFY26 witnessed broad based launches from all key players, with Delhi-NCR being the most active market. It witnessed multiple launches from reputed developers and irrespective of the ticket size, the response has been very encouraging. DLF’s Privana and a township project by a Bengaluru based developer recorded a sell-out performance. Key highlights from the coverage universe include: i) DLF is expected to outperform others with the success of Privana North and we expect Keystone to report its best quarter with 3 new launches across the western and eastern suburbs of Mumbai, ii) Performance of Sobha and Oberoi shall be driven by the successful launch of the Noida project and a new tower at Elysian respectively and iii) With c. INR 80bn worth of launches, we believe Godrej Properties (GPL) could record pre-sales of INR 70bn, down 19% YoY. We expect our coverage universe to report pre-sales of INR 281bn, up 22% YoY. We maintain positive stance on the sector with DLF, Sobha and Keystone as our top picks.

* Healthy start to the year: Unlike in FY24, where the new supply in the initial months was large driven by a few developers, 1Q witnessed broad based launches from all key players. From the listed universe perspective, Delhi-NCR has been the most active market during the quarter with multiple launches by Tier-1 developers. Moreover, irrespective of the ticket size, the response to all key launches in this market has been very encouraging.

* Expect coverage universe to report 22% YoY growth in bookings: Among the coverage universe, DLF is expected to outperform others as it reported its 3 rd sell-out in a row at the Privana North (Gurugram) project. We expect the company to deliver pre-sales of INR 115bn, up 80% YoY. Similarly, we expect Keystone to report its best ever quarter with pre-sales of over INR 9.5bn (up 55% YoY), aided by 3 new launches in the quarter with a cumulative GDV of c. INR 30bn. GPL had a successful launch in Bengaluru wherein it sold c. 75% of the launched inventory. Overall, it has launched c. INR 80bn worth of inventory across Bengaluru, Delhi-NCR and Pune in 1QFY26 and is expected to report quarterly presales of INR 70bn, down 19% YoY. Lodha’s pre-sales growth (expected to be 14-15% on a YoY basis) should be driven by 4 new launches across MMR, Thane and Bengaluru. For Sobha, the success of its maiden project in Noida, together with new inventory at Kochi should drive pre-sales performance this quarter. With a robust response to the new tower launch at Elysian (Goregaon), Oberoi is expected to report healthy pre-sales of INR 15bn. We expect our coverage universe to report pre-sales of INR 281bn, up 22% YoY.

* Industry Trends: Housing sales across top 7 cities declined 20% YoY in 1QFY26 to 96k units (Source: Anarock). As per Anarock, the increased geo-political actions along with elevated prices impacted the performance during the quarter. However, the report highlighted that the buyer sentiment is recovering led by declining inflation and repo rate cut by RBI. New supply also decelerated by 16% YoY to 117k units, where MMR and Delhi-NCR accounted for 48% of total launches. The contradicting trend in the performance of listed universe can be attributed to the fact that the core of the residential market has steadily shifted to the higher ticket sizes. Units priced under INR 5mn accounted for 54% of the total sales in the market in CY18 but now constitute just 22% (source: Knight Frank). On the other hand, the sales contribution of units priced over INR 10mn grew from 16% in CY18 to 49% in H1CY25.

* DLF, Sobha and Keystone are our preferred picks: We feel the residential cycle numbers are here to stay; while there could be a minor moderation. The demand-supply scenario is healthy directionally with high absorption and comfortable inventory levels. At current levels, DLF (Mar’26 TP: INR 1,000), Sobha (Mar’26 TP: INR 1,850) and Keystone (Mar’26 TP: INR 855) are our preferred picks. We raised our TP for Sobha as we assign 20% BDV premium to the residential business given the acceleration in project additions post the rights issue. Embassy Office Parks is our preferred pick in the REITs space.

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