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Housing demand remains well ahead of pan-India trends

Bengaluru is one of the best-performing regions in terms of housing demand among the top 8 cities. Absorption grew 14% YoY to 115msf in FY26, which is 14.5pp higher than the pan-India growth. This has continued in FY27, with absorption growing 20% YoY to 30.6msf in 1QFY27, which is 17pp higher than the pan-India growth. In 2QCY27, housing units sold in Bengaluru grew 12% YoY, which is 12.9pp higher than pan India and is the highest among the other top cities. Approval-related challenges are largely behind, and several listed developers with the MOFSL coverage, such as Prestige Estates, Lodha Developers, and Godrej Properties have launched projects in 2QFY27. These launches would support pre-sales during the quarter. A few pockets in Bengaluru are still facing delayed approvals due to zoning issues within the city, but these would eventually be streamlined.

Premium and luxury housing finds support from AI-related dynamics

Bengaluru’s housing demand continues to remain healthy, which has given prudent developers confidence to launch sizeable projects in the region. Housing prices continue to increase, albeit at a slower pace compared to the FY21-25 period. The price growth witnessed in the last 5-6 years was largely a catch-up phase following the downcycle. Even though the price growth has moderated, it can be considered healthy. AI has led to an increase in more addition of high paying value-add jobs, which has translated into increased demand for the premium/luxury segments. As some of the entry-level jobs are affected by AI, sales in the affordable and midincome housing segments have been slow in recent months.

Recent launches in Bengaluru received a healthy response

In 2QFY27, projects launched in Bengaluru by listed developers (MOFSL coverage) included two projects by Prestige Estates (INR28b GDV), two projects by Godrej Properties (INR21b GDV; total potential INR48b) and one project by Lodha Developers (INR20b GDV). These have received healthy responses.

* Prestige Estates (PEPL) launched three projects in 2QFY27 with a combined GDV of INR40b, including Prestige Parklane, Bengaluru (INR18b GDV), Garden Breeze at TPC Sarjapur in Bengaluru (INR10b GDV), and Prestige Palm Court in Chennai (INR12b GDV). Our checks suggest that all of these witnessed healthy sales conversion. The company also had INR245b of existing inventory as of 1QFY27, which would drive pre-sales in 2QFY27. We expect ~INR67b (+11% YoY) presales in 2QFY27.

* Brigade Enterprises (BRGD) did not launch any new project in Bengaluru in 2Q but received a healthy response to the other two projects that it launched in 2Q in other regions – Brigade Barcelona in Hyderabad (INR27b GDV) and Misty Greens in Mysuru (INR3b). It had existing inventory worth ~INR90b as of 1QFY27, which would support sustenance sales during the quarter. Consequently, we expect the company to report ~INR21b pre-sales in 2QFY27, flat YoY.

* Sobha (SOBHA) reported 16% YoY pre-sales growth to INR22.1b in 2QFY27 as it continued to receive healthy response from its sustenance inventory in Bengaluru and Gurugram. The company launched two projects in 2Q, including a project in Calicut (~INR16b GDV) and in Mysuru (INR3b GDV). The recently launched P-1 of the Hoskote project witnessed healthy sales, and given the sizeable land parcel here, we expect it to be launched in phases over the next 8- 10 years.

We prefer BRGD, which is our top pick in the SMID space

Bengaluru’s market pulse gives us confidence in the continuity of a healthy demand outlook for housing and office space. Apart from the favorable dynamics that Bengaluru offers, with competition increasing from other national developers, core regional players have diversified well across other regions. This would give additional legs to grow over the medium term. Developers such as PEPL, SOBHA, and BRGD are currently trading at an attractive 25-65% discount to their NAVs. Our preferred pick is BRGD given its diversified portfolio in the residential and office segments and multiple levers of growth in both divisions. The stock is trading at ~65% discount to NAV and offers deep value. We reiterate our BUY rating on the stock with a TP of INR900, implying a 57% potential upside.

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