Prestige Estates sees inventory buildup in luxury housing, calls for more mid-income, premium supply

The company is planning to launch its Prestige City project in Indirapuram in Ghaziabad

Prestige Estates Projects Ltd expects luxury housing demand to remain healthy despite industry concerns over a potential inventory buildup due to flattening demand even as it gears up to take on competition in markets beyond its Bengaluru stronghold.

"It is possible. Having said that, in the past five months in the Bengaluru market, we have launched more than 2,000 apartments in the Rs 4 crore-Rs 6 crore category in Whitefield, and we have already sold more than 1,100 of them. I think demand is very healthy. By the look of it, there is a little bit of inventory buildup happening in the luxury segment," Praveer Shrivastava, head of residential sales at the Bengaluru-based real estate firm, told Moneycontrol.

However, some ticket sizes, such as mid and premium, need more supply to match up to demand, he added.

“The situation is fine till absorption is good, but if it slows down, it will become a bit of a problem. We actually need more supply in the mid-income and premium segment, between Rs 1.5 crore and Rs 4 crore. That is where the real gap in demand-supply is," Shrivastava said during the interaction.

Market observers have warned of a slowdown in the luxury housing segment, particularly in the above-Rs 4 crore category, with registration data showing a decline in sales pace for marquee projects in markets like Mumbai.

According to rating agency India Ratings and Research, sales growth is expected to moderate in FY26 to 9 percent, from the FY25 estimate of 17 percent, with an "inventory risk" in the luxury segment, priced Rs 4 crore and higher.

The largely southern India based Prestige Estates is now looking to take the fight to other large developers in markets such as the Mumbai metropolitan region and the National Capital Region (NCR), including in coveted micro-markets. The company is also seeking to dip its toe in other competitive markets, such as Pune, while retaining Bengaluru as its largest market.

NCR plans

In NCR, the company is planning to launch its integrated township format Prestige City project in Ghaziabad's Indirapuram, on a 62.5-acre land parcel with a gross development potential of around Rs 11,000 crore. The project also includes a shopping mall from the group's Forum brand. The company has spent around Rs 1,000 crore on land and initial approval costs, Shrivastava added, with total spending of up to Rs 8,000 crore possible for the project.

The company also sounded bullish on the NCR market despite increasing competition in the premium housing categories, with strong, local players such as DLF being challenged by developers such as Macrotech (Lodha), Birla Estates, and others, and is maintaining business development plans in key micro-markets.

"We are looking at acquiring more partnerships and land that we can work on. We are working on two land parcels right now. One is at KG Marg in Delhi, and one is at Sector 150 in Noida. However, we are looking for more regions to explore, such as Gurugram, and we would like to pick up some more land parcels in Noida. We need to have a wider footprint in Delhi NCR," said Shrivastava.

However, he warned that despite a demand-supply gap existing in the NCR market, most new launches in the area are in the above-Rs 4 crore category, dubbing it "not sustainable", which keeps a lot of demand in lower ticket sizes unserviced. He also noted "frothiness" in some markets, such as Gurugram, which has prompted some developers to come up with easier payment plans to attract more customers.

Shrivastava said despite the company recently raising around Rs 5,000 crore from a qualified institutional placement (QIP), nearly all of the investment towards the Indirapuram project, as well as two recent launches in Bengaluru, is expected from internal accruals. The proceeds from the QIP are being deployed towards retiring debt as well as land acquisition across its target geographies, according to the company.

Mumbai projects

In the Mumbai metropolitan region, Prestige Estates is planning to deliver its first two projects in the ongoing year—the Prestige Jasdan Classic in Mahalaxmi and the Prestige Siesta project—the latter being part of the large Prestige City development in Mulund. The company has expressed a long-term target of western markets delivering around Rs 10,000 crore each year to its overall revenue.

In Mumbai, Shrivastava added that the company is proceeding with its planned ultra-luxury Prestige Nautilius project, located at Annie Besant Road in Worli, where it is targeting an average ticket size of up to Rs 50 crore, with a total gross development value of Rs 10,000 crore. This is in a market which has attracted the attention of all major developers for luxury developments, with a large quantum of supply available and upcoming, from firms such as Birla Estates, Oberoi Realty, Macrotech, and other large local developers.

However, despite the prospect of competition in sought-after micro-markets in a slightly flattening market, Shrivastava was upbeat about the company's prospects in key micro-markets, in the face of higher supply, due to the company's "reputation" and the quality of their product.