Real estate demand moderating, says Anand Rathi; DLF, Oberoi better placed

Anand Rathi attributed the slowdown in the real estate sector to weaker hiring and salary growth, particularly in the IT sector, along with subdued capital market performance over the past two years.

Brokerage firm Anand Rathi said the real estate sector is entering a phase of moderation after a strong post-Covid upcycle, during which housing sales grew at a CAGR of around 51 per cent between CY20 and CY23.  

The brokerage said the slowdown first emerged in the affordable and low-mid income segments, followed by the mid-income category, while premium and luxury housing have now started showing signs of moderation. 

"The CY20-23 upcycle was extraordinary: pre-sales compounded at around 51 per cent CAGR, matched by an almost equally strong 52 per cent rise in supply. That momentum has since eased, with demand growth declining by around 9 per cent CAGR over CY23-25. Overhang has edged up from around 14 months in CY24 to around 18 months in CY25," the brokerage said. 

 

Anand Rathi attributed the slowdown to weaker hiring and salary growth, particularly in the IT sector, along with subdued capital market performance over the past two years, which has weakened the wealth effect that previously supported housing demand.  READ | Vedanta, NALCO, Hind Zinc: Metals stocks dip up to 3%; here's why 

The report highlighted that the top 20 IT companies recorded a net decline of 36,417 employees between December 2022 and December 2025, reflecting softer hiring trends and weighing on housing demand in key IT hubs. 

"This, we believe, is reflecting in softening demand in IT hubs such as Bengaluru, Pune and Hyderabad. Moreover, weak capital markets over the last two years have further added to the woes," the brokerage said. 

Despite the moderation, Anand Rathi believes the current phase represents cyclical normalisation rather than a structural downturn. The brokerage noted that sector valuations have corrected by about 25 per cent from their peak, although valuations are still not inexpensive given the ongoing slowdown. 

Unlike the 2017-21 downturn, developers today have stronger balance sheets, lower leverage, and better access to capital. The brokerage said developers with strong balance sheets, diversified portfolios across segments and geographies, and meaningful annuity income streams are better positioned to navigate the current environment. 

Among the listed real estate companies, Anand Rathi said DLF, Oberoi Realty and Prestige Estates appear to be well-placed in the current scenario. 

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