For the first time in 5 years, developers abandon mid-income launches in Q2FY26

According to DLF’s Q2FY26 results presentation, all new sales in the development business came from high-end launches -- such as The Westpark in Mumbai and the DLF Privana South -- in Gurugram, both falling in the Rs 3 crore range and above. New sales bookings stood at Rs 4,332 crore, entirely from these premium launches. The company said that its “super-luxury segment continues to be robust,” and said the strong response validates its focus on “curated luxury offerings.”

Aakash Ohri, Joint Managing Director and Chief Business Officer at DLF, said during the Q2 earnings call that the company will continue to concentrate on projects “in select micro-markets with strong pricing power and limited competition.” The company added that its low-cost land bank and focus on luxury projects have “delivered consistent margin accretion.”

Meanwhile, Macrotech Developers (Lodha) followed a similar path. Its Q2FY26 investor presentation showed pre-sales of Rs 4,560 crore, with no new project in the sub-Rs 2 crore category. The developer launched just one new residential project during the quarter in Mumbai’s Western suburbs, with a gross development value of Rs 2,300 crore, well above mid-income affordability levels.

Ravi Shankar Singh, Managing Director, Residential Services, Colliers India, said, “The mid-income segment is not dead but it’s no longer the preferred growth engine for India’s top developers. They are chasing profitability and resilience, and right now, that means going premium. Markets like Pune, Bengaluru, Hyderabad are seeing launches in the Rs 1.5-crore ticket size, which is the new mid segment.”

Oberoi Realty reported a strong quarter, entirely driven by high-end projects. The company also said that its NCR expansion plans, including an upcoming Gurugram project, will target the premium segment.

Sobha and Brigade follow the same pattern

Sobha's quarterly data showed that homes below Rs 2 crore accounted for less than one-third of total sales. The bulk of its bookings in Q2 came from homes priced between Rs 2 crore and Rs 3 crore (46 percent) and above Rs 3 crore (27 percent).

Said Managing Director Jagadish Nangineni: “Steady demand in the luxury real estate segment reflects the strength of a growing economy, with improving macro parameters.” He added that Sobha’s next wave of launches, including Sobha Magnus in South Bengaluru, will continue to target affluent buyers.

Similarly, Brigade Enterprises' new projects in Bengaluru and Chennai were entirely in the upper-income category. Executive Chairman MR Jaishankar said during the Q2 earnings call:  “Sustained momentum in our residential portfolio is driven by premium launches with a healthy pipeline of upcoming projects across all focus markets.” The company has about 11 million square feet of residential launches planned for the next four quarters, with an emphasis on “premium and lifestyle offerings.”

The trend is consistent across all five listed players but none have announced upcoming mid-segment launches for the next two quarters either. Instead, their project pipelines feature developments in Gurgaon, Mumbai’s Western Suburbs, Bengaluru, and Pune, with per-unit values starting at Rs 2 crore and rising beyond Rs 10 crore for flagship offerings.

During Brigade’s call, the management said that strong sales and zero residential debt have enabled it to reinvest aggressively into “high-potential land parcels in key micro-markets.” Sobha and DLF also cited similar strategies to build on balance sheet strength through selective land acquisitions.

The reason behind the shift

This collective move away from mid-income housing, historically the core of India’s urban housing demand, stems from a mix of financial and market realities.

“While job creation, urban migration, and cross-city movement continue to drive genuine end-user interest, the absence of adequate mid-segment supply has created pent-up demand,” said Mehta. “Once appropriately priced projects are launched in this segment, absorption is expected to remain strong.”

First, rising input costs and regulatory levies have compressed margins in the Rs 70 lakh–Rs 1.5 crore category, making luxury projects more viable for large developers. Second, the premium segment has shown stronger absorption, with high-net-worth buyers showing little sensitivity to interest rate movements.

Singh added, “Ultimately, affordability will shape the trajectory of the housing market. The surge in premium, large-format homes was a response to the sales slowdown between 2014 and 2021, but that demand now appears to be tapering off. We're beginning to see a shift towards more compact apartment layouts, while still retaining premium features — an approach aimed at meeting the aspirations of the mid-income segment seeking affordability without compromising on quality.”

Lodha’s investor presentation highlighted “price growth of about 3 percent YTD” and steady demand despite limited launches, while Sobha’s management cited “record cash flow generation and a net cash balance sheet” as evidence of the resilience of its high-end portfolio. DLF said its sales pipeline has a “gross margin potential of over Rs 40,000 crore,” driven primarily by luxury developments in Delhi-NCR and Mumbai.

Mehta explained that “Regulatory reforms, particularly the introduction of RERA, have been instrumental in improving financial discipline across the industry. The requirement to maintain escrow accounts and the withdrawal-linked progress norms have streamlined cash flows, benefitting larger, more compliant developers.”

Similarly, Singh added: “RERA has been transformative for the real estate sector, restoring credibility and transparency across the market. It has triggered significant consolidation, with many smaller, non-compliant players exiting the space.”