K-shaped trend reshapes housing market as branded developers tighten grip: Report

New Delhi, [India] July 3 (ANI): India's residential real estate market is witnessing a pronounced K-shaped trend, with large branded developers continuing to expand their dominance while smaller players steadily lose ground, according to a report by Motilal Oswal Financial Services (MOFSL).
The report said market consolidation has accelerated since FY21, driven by stronger balance sheets, better execution capabilities and aggressive expansion by leading developers.
"Top developers have gained market share amid broader sector exhibiting K-shaped trends," the report noted, adding that the market share of its coverage universe has expanded by 530 basis points to around 20 per cent since FY21. It expects this share to rise further, backed by an estimated 13 per cent compound annual growth rate (CAGR) in pre-sales during FY26-28.
The report attributed the trend to the shrinking presence of smaller developers. After a surge in project launches during the post-pandemic housing boom, the number of active developers has fallen sharply as many exhausted their land banks and struggled to sustain growth.
According to the report, "new supply has become a function of a few," with the average area launched per developer rising significantly as consolidation gathers pace.
Demand, too, has increasingly shifted in favour of established brands across key housing markets such as NCR, Mumbai Metropolitan Region (MMR), Bengaluru and Pune.
"Demand showcases a K-shaped trend in the top four markets as branded/well-known developers have continued to grow despite the broader market showing a dip," the report said. It added that the market share of leading developers in these cities has risen between two and four times since FY17.
MOFSL believes the ongoing consolidation is being reinforced by disciplined supply, healthy cash generation and significantly lower leverage across the sector. Net debt has declined by 58 per cent since FY17, while listed developers continue to report robust operating cash flows.
The report also suggested that the current housing cycle has not yet peaked, unlike previous downturns marked by excessive leverage and oversupply. Inventory overhang in the top eight cities remains at about 20 months, while developers continue to maintain calibrated launches aligned with demand.
Going forward, the brokerage expects diversified developers with strong execution capabilities and healthy balance sheets to outperform, supported by sustained demand for branded housing projects and continued sector consolidation. (ANI)