India’s residential real estate sector, which has enjoyed a prolonged period of strong sales and rising property values, may be entering a more challenging phase as construction activity slows and project execution pressures increase, according to industry experts and recent market research.
A study by real estate analytics firm Liases Foras highlights a growing mismatch between the number of homes being offered for sale and the pace at which projects are being built. The findings suggest that developers are adding supply faster than they are progressing with construction, potentially creating inventory and execution risks across major markets.
Data reviewed by Hindustan Times shows that only 55% of India’s marketable housing stock was under construction as of March 2026, compared to 75% in March 2017. While total marketable supply across the country’s eight largest housing markets increased from 3,601 million sq ft in 2017 to 4,010 million sq ft in 2026, active construction volume declined from 2,700.75 million sq ft to 2,205.5 million sq ft during the same period.
“Between 2017 and 2026, the overall marketable supply grew by 11%. This clearly indicates a 20% decline in the construction pace, and it has nothing to do with the ongoing West Asia war,” said Pankaj Kapoor, founder and managing director of Liases Foras.
The sector is also grappling with rising construction expenses. Industry estimates indicate construction costs could increase by 3% to 5% in 2026, driven by higher labour expenses, supply-chain disruptions and elevated prices of key materials. Developers say labour shortages and inflationary pressures are further complicating project execution.
According to developers, construction costs have already risen by ₹250 per sq ft, translating into a 4% to 6% increase over prevailing costs ranging between ₹4,000 and ₹6,000 per sq ft.
Kapoor noted that the immediate concern is not weakening demand but ensuring that construction progress keeps pace with project launches. “Emerging execution and inventory risks will need careful navigation, as aggressive supply additions outpace construction progress in several markets,” he said.
Industry experts caution that developers with high debt levels or overly optimistic pricing assumptions may face greater pressure if housing sales slow. “The primary risk lies in unrealistic financial underwriting, where projects are built on the assumption of continuously rising prices and sustained high sales velocity,” said Cyrus Mody, founder and CEO of Viceroy Properties.
Market participants warn that a prolonged slowdown could affect employment, project execution and capital flows, making disciplined expansion and financial prudence increasingly important for developers navigating the next phase of the housing cycle.
Source: Hindustan Times
