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Real Estate – Commercial segment continues to witness uptick despite slowing residential segment

ICICIdirect Research 16 Jan 2026 DISCLAIMER

Commercial leasing achieved new peaks in CY2025 with leasing of over 80 msf (Knight Frank – 86.4 msf, CBRE -  82.6 msf) driven by ~38-39% contribution from Global Capability Centres (GCCs). The outlook for 2026 is expected to be even stronger led by 1) technology sector continuing to drive leasing 2) robust growth for flexible workspace 3) GCCs expected to comprise 35-40% of the total absorption in 2026.
Residential realty market seemed to have plateaued in 2025 owing to double digit pricing growth across key markets viz. NCR (19%), Bengaluru (12%), Hyderabad (13%) along with arguable slowdown in domestic equity markets, weak pricing outlook for 2026, continuous rupee depreciation (NRI demand), among others. Notably, higher ticket size units (>₹ 1 cr) continue to do well (up 14% YoY).
Visible weakness is being seen in NCR region (due to relatively highest pricing growth over the trailing two years) as highlighted in Signature Global’s Q3FY26 operational update (pre-sales declined 27% YoY, flat QoQ). Other weak operational update came from Kalpataru (pre-sales dip of 14% YoY for Q3FY26). However, Sobha and Lodha developers announced pre-sales growth of 52% YoY (up 11% QoQ) and 25% YoY (up 23% QoQ) respectively for Q3FY26.
Retail consumption driven by festive demand remained strong in Q3FY26 as witnessed in 20% YoY retail portfolio consumption growth announced by Phoenix Mills for Q3FY26.
 
View – In the wake of continued momentum in office leasing and retail consumption, and positive outlook for FY26, while plateauing trend for residential segment (regional and player specific play) we prioritize our coverage universe stocks as follows - The Phoenix Mills, DLF, Brigade Enterprises, Oberoi Realty. Smaller players with strong promoter group backing can be looked at, albeit with a higher risk reward ratio such as Aditya Birla Real Estate, Max Estates, Arvind Smartspaces and Mahindra Lifespaces.

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