The Residential Cycle Enters Phase II, Beyond Pre-Sales

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The Residential Cycle Enters Phase II, Beyond Pre-Sales

Asia Pacific Insight

July 27, 2026 06:49 PM GMT

Morgan Stanley Asia Limited+MIndia – Developers Praveen K Choudhary

Equity Analyst

The Residential Cycle Enters Praveen.Choudhary@morganstanley.comMorgan Stanley India Company Private Limited+ +852 2848-5068

Monica Dasoju

Equity AnalystPhase II, Beyond Pre-Sales Monica.Sharma@morganstanley.com +91 22 6118-1154

India's residential upcycle continues but is maturing. Market

focus is shifting from pre-sales to earnings and cash flow. The

comparison between India and China is nuanced. We upgrade

Lodha to OW and downgrade DLF to EW.

India Property

Asia Pacific

Why positive? After four years of rapid recovery, with pre-sales rising at a 40% Industry View Attractive

CAGR since 2021, India developer stocks have underperformed as the market priced

in a housing downturn that has yet to materialize. ASPs continue to grow at a high- Exhibit 1: India Property: Changes to our

single-digit rate, above inflation. Top developers continue to gain market share, ratings and price targets

delivering ~20% pre-sales growth in FY25 and FY26. We think 15% pre-sales growth Price Target Upside/

Company CMP (Rs.) Rating

in FY27e is achievable in FY27/28 despite a high base, suggesting the residential (Rs.) (downside)

Prestige Estate 1,629 OW 2,050 26%

upcycle can continue. However, pre-sales no longer appear to drive outperformance

Lodha Developers 1,137 OW 1,450 28%

or relative performance. Godrej Properties 2,041 OW 2,500 22%

Oberoi Realty 1,823 EW 2,030 11%

Refining our valuation methodology: We now value Lodha and Oberoi on a

DLF Limited 646 EW 730 13%

reported earnings basis using PEG, given their use of the percentage-of-completion

Source: FactSet, Morgan Stanley Research estimates.