Large Real Estate Firms Drive Sector Demand, Yet Stock Growth Remains Weak: HSBC

by- Grihik
Feb 26, 2026

Despite 15% booking value growth for 9MFY26 and strong fundamentals with low unsold inventory and controlled debt, the BSE Realty Index has declined 8% year-to-date, underperforming the broader market. Investors remain cautious over demand sustainability, cash flows, and margins.

Mumbai, February 26, 2026: The real estate sector in India continues to remain fundamentally strong, supported by healthy demand, low unsold inventory, and controlled debt levels, though stock performance has remained weak despite steady operational growth, according to a report by HSBC .

Operational Performance Strong

The report highlighted that large real estate companies are driving sector performance, with residential pre-sales remaining steady. Booking value for a cohort of 17 developers grew 15 per cent for 9MFY26, following a strong growth of about 24 per cent year-on-year in FY25, indicating sustained demand momentum .

Booking performance remains broadly in line with annual targets, with bookings during 9MFY26 accounting for around 70 per cent of full-year guidance for major listed developers. Large real estate developers are performing better compared to mid-sized and smaller companies .

Project launches also improved during the period but remained lower relative to targets, reaching around 63 per cent of full-year guidance. Cash collections, which have been a key concern for investors, showed improvement, growing 14-15 per cent year-on-year for both 9MFY26 and 3QFY26 .

Stock Market Underperformance

Despite steady operational performance, stock market performance of real estate companies has remained weak. According to the data, the BSE Realty Index has declined 8 per cent year-to-date, compared to a 2.2 per cent decline in the NIFTY 50. Since the end of December 2024, the BSE Realty Index has fallen about 23 per cent, while the NIFTY 50 has gained approximately 8.1 per cent during the same period .

HSBC stated, "Large real estate companies driving up sector performance, but all stocks similarly under-performing" .

Investor Concerns

The report said investors remain cautious due to concerns that the residential demand cycle may be slowing, cash flows could weaken, and margins from new projects may be lower. Declining volumes, despite rising booking values, have also added to investor concerns .

Strong Industry Fundamentals

However, HSBC noted that the overall health of the real estate industry remains strong, with listed companies maintaining comfortable balance sheets and low leverage levels. This allows developers to reduce borrowing costs and support margin expansion by improving project returns .

Unsold inventory levels remain largely between one to two years, indicating stable demand conditions but also highlighting dependence on new launches to drive future growth .

Q4 Outlook

The report added that the fourth quarter will be crucial for the sector, as it is traditionally a strong period for deliveries, sales, and collections. HSBC expects the performance in Q4 to set the tone for the sector, with growth likely to remain strong