Camellias to Dahlias: Can DLF sustain its luxury real estate boom?

DLF has defied the downturn with record-breaking bookings.

India's largest listed real estate developer by market capitalisation, DLF, has exceeded its full-year FY25 booking guidance within just nine months. The catalyst behind this remarkable achievement? The overwhelming success of Dahlias, its ultra-luxury housing project in Gurgaon. With 173 units sold at an average price of Rs 70 crore each, DLF has proven its ability to command exceptional pricing power at the top end of the market. 

Post the Covid-19 pandemic, the demand for luxury and ultra-luxury homes has surged, and DLF Ltd. has capitalized on this growing trend with impressive sales. One standout transaction occurred in December 2024, when DLF sold a 16,290 sq ft penthouse at The Camellias for a record Rs 190 crore. This deal marked the costliest transaction in terms of price per square foot in the country, underscoring the strong demand for premium properties.

 

 

Recently brokerage firm CLSA upgraded the DLF stock to its "high-conviction outperformance" list, citing compelling valuations and a strong growth outlook as the rationale behind the inclusion of DLF in its list.

 

Buoyed by the sales of 173 homes for Rs 11,816 crore, DLF is now targeting Rs 23,000 crore-odd from the remaining 247 units at ‘The Dahlias’, which is the second ultra-luxury offering from DLF after the successful delivery of ‘The Camellias’. 

• The Dahlias offer apartments in two sizes which include 10,000 sq ft and 12,000 sq ft while penthouses are available in sizes of 16,000 sq ft and 19,000 sq ft.
• The ticket price for super-luxury apartments that have been sold ranges between Rs 55 crore and Rs 125 crore while it goes Rs 150 crore and above for the penthouses.
• When computed per square feet in super luxury, the price point in The Dahlias is Rs 1.05 lakh per sq ft on carpet area – which is among the highest in the country – and above Rs 65,000 per sq ft on super area.
• The apartments at The Dahlias were sold “by invitation only”. 
• The project spreads over 17 acres and offers around 420 super-luxury residences across 29 levels and eight towers. 
• The company plans to launch the project in three phases.
• The Dahlias has a revenue potential of around Rs 35,000 crore, which is 2.5 times that of The Camellias.

However, while these numbers are impressive, the bigger question remains: Is DLF’s market dominance sustainable, or is it simply benefiting from a temporary liquidity-driven boom?

 

A positive sign for the real estate market is the steady decline in unsold inventory since 2017. In 2024, even though sales volumes fell, new project launches decreased by 15%, avoiding a supply overhang. Despite slower unit sales, the total value of residential sales in India surged by 16% in 2024, driven by high-net-worth individuals (HNIs) investing in premium and luxury housing. According to a survey by Sotheby’s, real estate now constitutes 32% of Indian HNIs’ portfolios, and 62% plan to invest in property within the next two years. DLF has been a key beneficiary of this shift toward luxury housing. Currently, the NRI representation for DLF is almost 25 per cent, while in just Dahlias, the NRI percentage stands at 12 per cent.

 

DLF’s track record in Gurgaon's Phase 5, home to premium developments like Aralias, Magnolias, and Camellias, indicates that the company has carved out a niche at the highest end of the Indian real estate market. These properties have seen prices appreciate between six to forty times since launch. Now, Dahlias has further raised the bar, securing a staggering Rs 11,000 crore in bookings in just nine weeks—an achievement that took the Camellias project nearly a decade to reach.

 

However, the real question as per Kunal Bansal of Value Research is whether DLF’s ability to command such high prices represents a long-term competitive advantage or if it is simply riding a temporary wave of liquidity-driven demand.

 

The Rs 11,000 crore figure is not immediate:

As Bansal explains in a note, while DLF’s sales figures are impressive, the Rs 11,000 crore in bookings from Dahlias won’t immediately reflect in the company’s financial statements. Under Ind AS 115, real estate revenue is recognised when control (i.e., possession of the property) is transferred to the buyer. For a luxury project like Dahlias, where construction could take four to five years, revenue will only be recognised upon completion and possession. This disconnect between bookings and revenue recognition underscores the importance of cash flow analysis for real estate developers like DLF, as it will be crucial for the company to convert these bookings into steady cash inflows.

 

DLF's Growing Rental Business

 

Another major difference between DLF today and its 2008 version is the expansion of its rental business, added Bansal. In FY08, rental income stood at Rs 284 crore. Fast forward to Q3 FY25, and that figure has grown to Rs 1,200 crore—a 17-fold increase. With vacancy rates now at 7%, DLF is well-positioned to double its rental portfolio in the next five years, he said. 

 

 However, the success of this segment will depend on the quality of leases and inflation-linked rent escalations. If demand for rental space softens or if the company needs to reinvest heavily in its assets, this growth driver could face challenges.

 

Bansal says investors should watch out for the following risks:

Despite DLF’s strong position, several risks could impact its future prospects:

 

• Interest Rate Sensitivity: As real estate demand is closely tied to borrowing costs, further interest rate hikes could strain affordability metrics and dampen demand for both residential and commercial properties.
• Liquidity Cycles and Wealth Effects: Demand for ultra-luxury properties is often linked to stock market performance. If global liquidity tightens or India’s stock markets face a prolonged downturn, demand for high-end properties may slow.
• Regulatory Risks: The real estate sector is highly regulated, and changes in property taxation, environmental compliance, or foreign ownership rules could materially affect DLF’s margins.
• Increasing Competition: The Indian real estate market is becoming more institutionalised, with large players like Godrej Properties, Prestige Estates, and Macrotech Developers expanding aggressively in the NCR region. This increasing competition may challenge DLF’s historical dominance.

 

 DLF Limited, India's largest listed real estate developer by market capitalisation, has exceeded its full-year FY25 booking guidance within just nine months. The reason? The overwhelming success of Dahlias, its ultra-luxury housing project in Gurgaon. Selling 173 units at an average price of Rs 70 crore each, DLF has demonstrated exceptional pricing power at the top end of the market.

 

"DLF today is fundamentally different from its 2008 version. It boasts a stronger balance sheet, a growing rental business, and disciplined project selection. Its ability to command a premium in ultra-luxury housing remains unmatched - for now. However, real estate remains a cyclical business, and premium pricing power is not a given across all market conditions," said Bansal.