'In the past six months, capital markets have seen a dip, and realty is struggling. The stock-market investor will be cautious of putting that investment in real estate when there may be a slowdown coming.'
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Real estate majors in India have turned cautious with their project pipelines to prevent a buildup of inventories in the residential space as buyers and investors are holding off their realty expenditure amid a market tumble.
Developers and market watchers said the market was preparing for a cooling-off period in the coming months in Mumbai, Gurugram, and some others that had seen rapid growth in residential projects and sales in 2023 and 2024, due to post-pandemic demand.
Insiders expect developers to take stock of capacities and ensure that inventories that can be absorbed goes into the market.
"Gurugram’s real estate market is highly liquidity-sensitive. So when equity markets slow or uncertainty rises, property sales tend to decelerate.
"At the moment, both buyers and developers are being cautious, not as a sign of a downturn but as a pause to reassess market conditions. This allows developers to ensure that only thoughtfully designed inventories, aligned with consumer needs, come to the market,” Rakesh Bohra, chief operating officer, Gurugram-based Pioneer Urban Land & Infrastructure, told Business Standard in an interaction.
DLF, India’s leading developer, too has warned of sales slowing as against previous quarters or even last year.
“What we have told you is be prepared for a flattening of the sales curve,” DLF Chairman Rajiv Singh said in a recent meeting of investors, where he also noted that the pace of launches could be “lumpy” even as the Gurugram-based developer would attempt to “front-end” its launches.
Real estate analysts and research firms have reported the first quarter in 2025 seeing fewer sales than in previous years, largely due to rise in home prices, caution on the part of investors due to geopolitical developments and certain weaknesses in the Indian economy.
“Developers have also started to slow land purchases due to higher prices and therefore launches will also become slower in FY27. But launches will be recalibrated, which they intend to do in FY26 because all of them will not rush to the market. Q1 2025 has seen the number of transactions come down as against Q1 2024 for Delhi NCR,” said Mudassir Zaidi, executive director, Knight Frank India.
United States-based PropEquity said in a recent report sales of houses dropped 23 per cent to 105,791 units in the January to March 2025 period in top nine cities -- including Mumbai, the National Capital Region, Chennai, Hyderabad, Kolkata, and Pune -- with Mumbai and Hyderabad seeing the steepest falls of 36 per cent and 47 per cent year-on-year, respectively.
According to ANAROCK Research, 100,020 units were launched across the top seven cities in Q1 2025.
In Q1 2024, nearly 110,865 units were launched while it was nearly 109,570 in Q1 2023.
The number of inventories in the top seven cities at the end of Q1 stands at approximately 560,000.
"Amid global economic uncertainties coupled with skyrocketing prices, housing sales in the top seven cities went down by 28 per cent in Q1 2025 as against the corresponding quarter in 2024. According to ANAROCK Research, Q1 2025 saw housing sales of over 93,280 units while in Q1 2024 they were nearly 130,160 units.
"Q1 2023 recorded sales of nearly 113,770 units while Q1 2022 saw sales of about 99,550 units. Thus, Q1 2025 saw the lowest sales in the corresponding periods among the four years,” said Anuj Puri, chairman, ANAROCK Group.
Pradeep Aggarwal, founder and chairman of Gurugram-headquartered realty major Signature Global, said: “In the past six months, capital markets have seen a dip, and realty is struggling. The stock-market investor will be cautious of putting that investment in real estate when there may be a slowdown coming.
"While the India story in the long term remains robust, there will be some up-and-down cycles, some softness (in prices) will come, but not a downfall per se. So, there may not be an inventory buildup in the overall housing segment, but some price correction may happen. We’re already seeing that some players have started offering discounts.”
REALTY CHECK
Mumbai market changing colours
In the country’s leading real estate market of Mumbai, which has been witnessing a surge over the past couple of years, some developers have cautioned of oversupply due to modifications in Coastal Regulation Zone (CRZ) regulations, the removal of restriction on the floor space index (FSI) on developments within 500 metres of the CRZ or within the CRZ, which was leading to buildings in Bandra, Khar, Andheri, and Juhu coming up for redevelopment.
“I think the words are 'moderation and stabilisation'. There is a decline in overall supply and that is probably one of the reasons why you see a decline in demand also. There are offers also in the market to attract consumers,” said Rajat Rastogi, chief executive office (west and commercial), Puravankara.
Manan Shah, managing director of Mumbai-based MICL Group, which recently launched its Avaan Towers in Tardeo, said: “When stock-market investors make abundant money, they upgrade their houses. A pileup of inventories is starting, so that will also impact (sales sentiment). So you would see a slowdown this year onwards.”
“You have to be cautious about what projects you have, about what inventories you have, what prices are you looking to sell and what will sustain your growth,” he said.
Tata Realty & Infrastructure Managing Director and Chief Executive Officer Sanjay Dutt pointed to the delays in pending environmental approvals and the Supreme Court's verdict on the National Green Tribunal (NGT) directive that mandates approvals from the central government for developments exceeding 20,000 square metres within a 5-km radius of eco-sensitive zones, which led to some launches getting postponed.
“In terms of the market outlook, it’s true that Mumbai has experienced a slight slowdown recently. I anticipate this issue to be resolved in the near term. While challenges such as rising land prices and lengthier approval processes remain, demand is expected to stay steady,” he noted.
Luxury bucking the trend
Developers pointed to aberrations in the pattern, with luxury sales rising and continuing to break the slowdown trend.
DLF Home Developers Joint MD Aakash Ohri said the right kind of product would always attract interest as customers would take up high-quality projects that meet their requirements and add value to their portfolios.
“We have consistently demonstrated this across all segments and geographies, whether in Gurugram, New Gurgaon, Delhi, Chennai, Panchkula, or others, and across segments ranging from premium and luxury to super-luxury, with products starting from ₹2 crore, going up to ₹200 crore,” he said.
While he noted there would inevitably be checks and balances, and, as with any industry, demand will stabilise.
“However, we are still far from reaching that point. In terms of product offers, the industry is on an upward trajectory, and we are witnessing a new wave of development and innovation. While the pace may slow once the market reaches maturity, it is unlikely to come to a halt,” he added.
In Mumbai too, luxury housing is expected to continue drawing buyers.
Cyrus Mody, founder and CEO, Viceroy Properties, said that while there might be rationalisation in the number of projects developers were undertaking, there might not be any long-term systemic adjustment in demand for high-quality luxury housing in the Mumbai Metropolitan Region.
Feature Presentation: Rajesh Alva/Rediff
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