International brokerage firm Jefferies has revised its projections for key players in India's real estate sector, notably DLF and Godrej Properties, as the market experiences a cooling trend in luxury housing sales. The firm has adjusted its FY27 pre-sales forecast for DLF, reducing it by approximately 11% to Rs 20,000 crore. This downward revision reflects a slowdown in decision-making processes among potential buyers in the high-end market, which is particularly sensitive to broader economic uncertainties. Jefferies anticipates that sales for DLF will likely hover at the lower end of the company's previously guided range, highlighting the challenges currently facing the luxury segment. Despite these concerns, Jefferies continues to favor DLF due to its robust business fundamentals, including a steady launch pipeline and improving lease income, primarily driven by retail expansion in the National Capital Region (NCR).
The report also indicates a broader trend in the real estate market, predicting a significant moderation in growth rates. Jefferies forecasts a slowdown in pre-sales growth to about 6% in FY27, down from an impressive 21% in FY26. This anticipated deceleration is attributed to delays in high-value transactions, which are less likely to close swiftly during periods of macroeconomic uncertainty. The firm expects the June quarter to witness a notable slowdown, with pricing growth projected at around 5%, alongside a 2% increase in construction costs and a rise in interest rates. Notably, Jefferies observes that the recent decline in real estate stock prices, down roughly 20% this year and nearly 40% from peak levels in 2024, has largely factored in these headwinds, with current valuations now below pre-COVID levels.
In addition to DLF, Jefferies has identified Lodha and Godrej Properties as strong contenders in the current market landscape. The brokerage remains optimistic about Lodha, despite a near-term moderation in demand, lowering its FY27 pre-sales estimate by about 6% to Rs 23,500 crore while still projecting a year-on-year growth of 15%. The anticipated slowdown in demand is expected to affect primarily the large-ticket housing segments in regions such as South and Western Mumbai. However, Lodha's strategic moves, including monetizing data center land and expanding into new markets like NCR, are anticipated to support ongoing growth.
Jefferies has highlighted Godrej Properties as another resilient player in the market, attributing its strength to a solid business development pipeline and a flexible product mix. The brokerage estimates FY27 pre-sales for Godrej Properties at around Rs 37,500 crore, indicating a 12% year-on-year growth. This resilience, combined with strategic planning and market adaptability, positions Godrej Properties favorably amidst the shifting dynamics of the luxury housing market. As the sector navigates these challenges, the insights provided by Jefferies serve as a crucial barometer for investors looking to assess the potential impacts on real estate stocks moving forward.