Realty developers focus on cash flows as housing cycle enters mature phase

Shift away from launch-heavy pipelines seen in the last couple of years, say industry insiders

Listed real-estate developers in the country are expected to prioritise their cash flow and project execution in 2026-27 (FY27), signalling a shift from the robust business development seen over the past few years, according to analysts and industry executives.

 

Following a strong post-pandemic housing cycle and heavy land acquisition in recent years, developers are adopting a measured expansion strategy as sales growth normalises across key residential markets.

 

“Developers have turned increasingly selective, preferring asset-light structures such as joint development without stressing the balance sheet,” said Vijay Agarwal, sector lead (infrastructure), Equirus.

 

He added the focus was shifting to execution and cash-flow generation while maintaining lean balance sheets.

Godrej Properties, which in FY26 added projects with an estimated sales potential of ₹42,100 crore, more than double its guidance, has guided for around ₹20,000 crore of business development in FY27.

 

The company has indicated that it could become “free-cash-flow” positive if investment remains near guided levels.

 

In his company’s FY26 earnings call in the fourth quarter, Pirojsha Godrej, executive chairperson, Godrej Properties, said the company was targeting more sustainable growth after years of rapid expansion.

 

“The level of business development as a percentage of existing projects and as a percentage of kind of operating cash flow will keep coming down. We will therefore see a more consistent level of investment in business development, while our sales, collection and operating cash flows will grow quite sharply.”

 

In FY26, Lodha Developers’ gross development value (GDV) was around ₹60,000 crore, roughly 2.4 times its stated target. However, the company has suggested that expenditure on business development could remain muted over the next two years, citing a substantial existing project pipeline.

 

“As on April 1, our available GDV for sale is approximately ₹2 trillion,” Managing Director and Chief Executive Officer (CEO) Abhishek Lodha said during the company’s Q4 FY26 earnings call.

 

Karan Khanna, analyst at Ambit Institutional Equities, said: “The market is likely to increasingly reward operating cash flows, execution and balance-sheet discipline over aggressive pre-sales-led growth.”

 

Land prices in several key residential markets have significantly appreciated over the past three years, reducing the attractiveness of acquisition at elevated valuation.

 

According to Sharad Mittal, founder and CEO, Arnya RealEstates Fund Advisors, developers are entering a phase where executing and monetising acquired projects are becoming as important as adding new projects.

 

“The moderation in the business-development guidance for FY27 reflects a conscious shift to capital discipline rather than a slowdown in growth ambitions,” Mittal said.

 

Industry experts say the change should not be interpreted as retreat from growth. Instead, developers are recalibrating expansion plans after a period of exceptional growth and are becoming more selective about where they put in their money.

 

“Top players are understandably playing it safe by pacing themselves — but certainly in no way retreating,” said Anuj Puri, chairman, Anarock group.

 

“They are focusing on protecting their cash flow, locking in collection and completing ongoing projects, while continuing to acquire high-certainty projects in a disciplined manner.”

 

Shariq Merchant, associate dire­ctor (investment), WhiteOak Capital Mutual Fund, said the residential sector appeared to be moving from a phase of volume expansion to mid-cycle consolidation.

 

Amit Goenka, chairman and managing director, Nisus Finance, said the housing cycle was entering a mid-stage phase where working capital intensity rose and generating free cash flow became more challenging, quoting research from Nuvama Institutional Equities.

 

While growth in sales of residential houses may be moderating from the highs of the post-pandemic cycle, most experts say the sector remains fundamentally healthy, with large branded developers continuing to gain market share.

 

The top 11 listed developers in the country in FY26 recorded combined pre-sales of ₹1.48 trillion, up 18 per cent year-on-year.

 

According to a report by Emkay Global Financial Services, presales growth for 18 listed developers slowed to 17 per cent in FY26 from 20 per cent in FY25, 39 per cent in FY24, and 43 per cent in FY23. Presales growth this financial year is expected to moderate to 10-15 per cent.

 

Shifting trends

• Developers prioritise capital discipline as housing cycle matures
• Shift signals sustainable growth, not weaker sector fundamentals
• Experts view the change as a maturation of the housing cycle, with developers balancing growth ambitions and financial resilience
• Listed developers’ presales growth may slow to 10-15% in FY27 from 17% in FY26