Current Trends in India’s Real Estate Market

Published on April 27, 2026 and written by Cyril Jarnias

The Indian real estate market is undergoing a profound transformation. Behind the record sales and prices, a more nuanced reality is emerging: the rise of mid- and high-end segments, extreme pressures on affordable housing, the growth of secondary cities, a boom in office real estate, and a massive influx of foreign capital. All of this against a backdrop of public reforms, digitalization, and increasing pressure on housing affordability.

A booming but more selective residential market

The Indian residential sector remains in a sustained growth cycle. Between fiscal year 2019 and fiscal year 2025, housing sales in major cities jumped by nearly 77%. In value terms, sales reached approximately 3.47 lakh crore rupees (nearly $42 billion) in 2023, representing an annual increase of 48%. The year 2024 marked a twelve-year peak with over 350,000 units sold in the eight major markets.

This vigor is part of a phase of structural strengthening for the sector: the overall value of real estate in India is estimated at $482 billion in 2024, with a projection of $1.184 trillion by 2030, corresponding to a compound annual growth rate of approximately 10.5%. The sector’s contribution to GDP is expected to increase from 7% in 2024 to 13% by 2030.

Steeply rising prices in metropolitan areas

Overall, the official housing price index published by the Reserve Bank of India (HPI) is increasing at around 3 to 4% per year, but this average masks much sharper increases in major urban centers. Data from various observatories show that values in metropolitan areas far exceed the national trend.

The following table illustrates the average prices in the fourth quarter of 2024 in major cities, as well as the annual growth observed.

In the Mumbai metropolitan region, already the most expensive in the country, the pressures are particularly visible. For a small apartment of 30 sq m, the average price rose from about 4.7 million rupees in 2019 to 7.5 million in 2024. Over the last five years, the smallest units (less than 30 sq m) have seen their launch prices increase at an annual rate of about 8%, compared to 4.4% for larger units of 60 to 160 sq m. With land valued at around 2.16 lakh rupees per square meter, the room for truly affordable products remains very limited in this region.

A clear “premiumization” of demand

The most striking trend in the Indian residential sector is the move upmarket. Households able to buy are taking advantage of a perceived favorable economic situation, incomes relatively unaffected by the pandemic, and the prospect of sustained real estate inflation to position themselves in more expensive products.

Data on the distribution of sales by price segment is revealing. Across the entire market:

In 2024, homes priced above 1 crore accounted for nearly half of sales in the second half, representing a 29% year-on-year increase. In the first nine months of 2025, properties priced above 10 million rupees still recorded 4% growth even as the overall market declined by 12%. Their share increased from 52% of sales in early 2024 to 62% a year later. The 1.5–3 crore bracket is even identified as the main growth driver in 2025.

Some regions have become almost exclusively high-end. In the Delhi NCR region, 81% of sales in the first half of 2025 involved homes costing at least 1 crore; in Bengaluru this proportion reached 70%, and in Mumbai 36%. The rapid expansion of affluent and high-income households, combined with the search for more space, better amenities, and affirmed social status, partly explains this shift.

Affordable housing: A massive deficit despite public policies

While the overall market posts records, affordable housing in India faces a dual crisis: a very significant structural deficit and a slowdown in private supply. Available figures constitute a warning signal.

A gigantic, unmet demand

Rapid urbanization, population growth, and the influx of labor to cities create exponential demand for financially accessible housing. A young, mobile population with new aspirations fuels this demand, particularly in the Economically Weaker Sections (EWS) and Low Income Group (LIG) segments.

Recent estimates indicate a current deficit of affordable housing in urban areas between 9.4 and 10.1 million units. Future needs by 2030 would add about 20.7 million more units. In total, the “cumulative need” for affordable housing could therefore be between 30 and 31.2 million homes by 2030. To bridge this gap, it would, in theory, require building about 96,000 affordable homes per day until the end of the decade, a pace unmatched by current reality.

The affordable housing market is far from marginal, however. It is valued at $3.17 billion in 2024 and is expected to grow at an annual rate of about 19.8% until 2030, with a projected market size of 67,000 crore rupees by then. For the financial system, the potential is colossal: banks and housing finance companies could deploy up to 19.3 lakh crore rupees in financing for this segment by 2030, assuming a 77% borrowing rate and different loan-to-value ratios.

A collapse in private supply

On the ground, however, supply dynamics run counter to demand. In major cities, the ratio between new launches and sales in the affordable segment has literally collapsed. It was above 1 in 2019 and 2020 (around 1.05–1.20), meaning developers were launching slightly more units than were being sold. In the first half of 2025, this ratio fell to about 0.36: for every three affordable homes sold, only one is brought to market.

Private investments confirm the relative disinterest of large capital in this segment. Over the period 2011‑2024, private equity inflows into affordable housing reached only $1.9 billion, barely 7.8% of total private flows into the residential sector. Between 2019 and 2024, foreign funds represent only about 10.2% of these amounts, the rest remaining essentially domestic. In fact, the production of affordable housing is largely undertaken by small local developers with limited technical and financial capacity.

Powerful structural constraints on the supply side

If private developers keep their distance, it is not for lack of demand but due to often insufficient profitability. Several barriers operate simultaneously.

In addition to this land constraint, there are lengthy, fragmented, and often opaque approval procedures, which extend timelines and increase financial costs. The absence of a single-window system, multiple approval levels, and regulatory insecurity particularly discourage medium-sized players.

Developer financing is another major obstacle. Access to credit remains complicated for many developers, especially smaller ones. Yet, the recent period has been marked by strong inflation in construction costs: the price of cement, for example, has increased by about 22% since 2022, and over four years, construction inflation reached nearly 39%, with a 25% increase in labor costs in the last year. Under these conditions, the already thin margins in affordable housing compress, rendering many projects simply unprofitable.

Finally, insufficient infrastructure (roads, water, public transport) in the peripheral areas where most affordable programs are located reduces attractiveness for households, slowing sales and increasing commercial risk for developers. This set of constraints is what specialized reports call for addressing through “bold” supply-side reforms: mobilization of public land, relaxation of development control norms (FSI), subsidized financing, special affordable housing zones connected to metros, simplified approval procedures, etc.

Financial affordability: Indicators under pressure

From the household perspective, purchasing capacity has also deteriorated. Two indicators clearly show this: the price-to-income ratio, which compares the average price of a home to the household’s annual income, and the EMI-to-income ratio, which measures the weight of the loan installment in income.

Disparities between cities are extreme. In the Mumbai metropolitan region, the price-to-income ratio reaches 14.3, and the monthly loan installment can represent up to 116% of the average income, meaning a typical household simply cannot bear the purchase burden without substantial aid or exceptional down payment. In Delhi, the price-to-income ratio is around 10.1, and the EMI-to-income ratio reaches 82%. In contrast, cities like Ahmedabad and Chennai, with a price-to-income ratio of about 5.1 and an EMI-to-income ratio close to 41%, appear much more affordable. Kolkata, with an EMI-to-income ratio close to 47%, is considered the most accessible among large cities.

The table below summarizes these affordability gaps.

In some cities, specific affordability indices confirm these trends. Ahmedabad, for example, is ranked as the most accessible city with an index around 18%, followed by Pune (22%) and Kolkata (23%). Mumbai shows, in contrast, an affordability “stress” level close to 48%.

A massive, yet incomplete public response

Aware of the scale of the deficit, Indian authorities have multiplied programs in favor of affordable housing, combining supply-side subsidies, demand-side aid, and tax incentives.

PMAY and other major programs

The central pillar of this policy is the Pradhan Mantri Awas Yojana (PMAY) mission, launched in 2015 with the explicit goal of ensuring housing for all (‘Housing for All’). This initiative has two components: PMAY-Urban (PMAY-U) for cities and PMAY-Gramin (PMAY-G) for rural areas.

The first phase aimed to build 20 million urban homes and 30 million rural homes. Even though the initial 2022 deadline was extended to complete sanctioned units, a second urban phase (PMAY 2.0) has been launched, with an additional target of 10 million urban homes and 20 million rural homes over five years.

In rural areas, PMAY-G funds each unit to the tune of 1.2 lakh in plains and 1.3 lakh in difficult areas, with a Center/State funding split of 60/40 or 90/10 depending on the region. The ambition is to cover 4.95 crore eligible rural households by March 2029. As of early 2025, over 3.79 crore allocations had been decided, 3.34 crore homes sanctioned, and 2.69 crore actually completed.

Tax incentives and infrastructure status

In addition to direct subsidies, the government has used the tax lever. The Goods and Services Tax (GST) for under-construction homes meeting affordability criteria was reduced from 8% to 1% in 2019, substantially reducing acquisition costs for households. The affordable housing segment has also obtained “infrastructure” status, theoretically opening easier access to certain long-term financing.

Dedicated funds and “project rescue” status

To solve the problem of stalled projects, the government created the SWAMIH (Special Window for Affordable and Mid‑Income Housing) fund, initially provisioned to unlock stalled affordable and mid‑income housing projects. A second tranche (SWAMIH 2.0) of 15,000 crore rupees has been planned, although, as of the report date, only 4,200 crore had been effectively injected, illustrating the slow execution.

Simultaneously, an Affordable Housing Fund (AHF) was created within the National Housing Bank, offering lenders a refinancing line whose cost is capped at 350 basis points above the 10-year government bond yield. The goal is to make loans to modest households more attractive for banks and housing finance companies.

Real but partial effectiveness

These mechanisms have undeniably enabled the production of millions of homes and supported the homeownership of previously excluded households. However, the urban shortage remains massive. A technical group (TG-12) had already estimated the urban housing shortfall at nearly 18.78 million in 2012, which served as the basis for the ‘Housing for All’ mission. Current projections still mention an urban deficit of about 10 million units, with an additional need for 25 million affordable homes by 2030.

The primary blind spot of the policies remains mobilizing private supply on a large scale in the affordable segment. Despite GST reductions, tax benefits, and infrastructure status, land, regulatory, and cost constraints continue to make this segment less attractive compared to the margins achieved on premium and luxury products. Major reports thus argue for a shift towards supply-side reforms, rather than new demand-side support measures that risk further fueling prices without addressing the structural shortage.

The rise of offices, REITs, and foreign capital

The dynamism of the Indian real estate market is not limited to the residential sector. Office, logistics, and data center real estate is booming, supported by the massive establishment of Global Capability Centres (GCCs), the e‑commerce boom, and foreign investment.

An office market in a prolonged growth cycle

Office leasing figures illustrate the scale of the phenomenon. In 2024, nearly 79 to 89 million square feet of office space was absorbed nationwide, a historical record. Over the 2023‑2025 quarters, gross leasing volumes regularly remained above 20 million square feet per quarter, with net absorption (expansion of occupied space) rising strongly.

In the first half of 2025, approximately 42 million square feet was leased in the eight major cities, of which 21.4 million was in the second quarter, up 5% from the previous quarter. The third quarter of 2025 showed an additional 22.6 million square feet, a quarterly increase of 7%. Net absorption reached 13.5 million square feet in the second quarter (up 19% year-on-year) and 16.3 million in the third (up 35% year-on-year).

Under pressure from robust demand, rents are trending upwards, with surges of 15 to 16% per year in Hyderabad and Mumbai for some prime segments.

The central role of Global Capability Centres and the service sector

Office demand is driven by several segments: Global Capability Centres (GCCs), IT-BPM services companies, flexible space operators, banks and insurance (BFSI), industrial and engineering companies. GCCs are particularly structuring: over 1,800 such centers already operate in India, with a projection of 2,500 in the short term. They represent about a quarter (24–27%) of leased space, with 11.4 million square feet leased in the first half of 2025, a record level.

IT‑BPM companies remain the largest users by volume, with about a third of gross leasing, while coworking/flex operators account for about 16 to 18%, growing strongly, driven by particularly high demand from SMEs and start‑ups. Bengaluru and Pune together account for over 60% of the space taken by GCCs, reinforcing their status as ‘global services capitals.’

REITs: The institutionalization of commercial real estate

In this context, Real Estate Investment Trusts (REITs) play a structuring role. In a few years, India has built a significant REITs market, though still young compared to those of the United States or Singapore.

Indian REITs offer average yields of 6 to 7.5%, higher than those of mature markets like the US or Singapore. They are required to invest at least 80% of their portfolios in completed, income-generating assets and distribute a minimum of 90% of their distributable cash flows at least twice a year. These requirements favor high-quality assets and professional management practices.

Influx of foreign investment and FDI

The transformation of the real estate market also relies on a continuous flow of foreign investment. The progressive liberalization of FDI rules, with an opening to 100% under the ‘automatic route’ for many types of construction projects, has made India very attractive. Between April 2000 and June 2025, the country received over $1.09 trillion in cumulative foreign investments across all sectors. In fiscal year 2024‑25, FDI reached over $81 billion, up 14% from the previous year.

International investors – funds, developers, global REITs – primarily target large cities like Delhi, Mumbai, Bengaluru but are also increasingly interested in Tier 2 and 3 cities, particularly for logistics, industrial parks, warehouses, and certain residential segments. Players like Blackstone have committed considerable amounts, over $11 billion in Indian real estate, with a significant portion dedicated to Mumbai.

The second quarter of 2025 saw a spectacular rebound in foreign institutional investment in real estate, with a 242% increase quarter-on-quarter, reaching nearly 10,226 crore rupees, of which about 69% was directed towards commercial assets (office, retail, logistics). Capital primarily came from the United States, Japan, and Hong Kong.

New geographies: Rise of Tier 2 and 3 cities

While large metropolitan areas still concentrate the majority of transactions, Tier 2 cities are becoming true growth engines. The price differential, land availability, improved infrastructure, and industrialization policies attract both investors and households.

For investors, these markets offer announced returns of 15 to 20% per year, with a lower entry ticket. For households, they represent a more affordable alternative to saturated metros, while benefiting from the progressive upscaling of services, jobs, and infrastructure.

Technology, co-living, co-working: New real estate uses

The transformation of the Indian real estate market is also driven by the rise of PropTech, co-living, co-working, and new forms of financing.

PropTech: Digitizing the value chain

Online real estate platforms, virtual reality, artificial intelligence for valuation and recommendation, blockchain for land registration, the Internet of Things for smart buildings: all these solutions are grouped under the term PropTech. The Indian PropTech market is valued around $1.2 to $1.66 billion in 2024‑2025 and could reach $3.6 to $4.3 billion by 2031‑2033, representing annual growth of 13 to 17%.

Major search portals, co-living operators, furniture rental or fractional ownership platforms are developing rapidly, supported by a well-funded startup ecosystem. The common goal is to increase transparency, reduce transaction costs, and simplify processes – all historical weaknesses of the Indian market.

Co-living and co-working: Responses to mobility and high costs

Co-living, particularly for young professionals and students, is another structuring trend in urban centers. The overall co-living market in India could be worth around $40 billion in 2025, with an annual growth rate of about 17%. Many studies indicate that co-living offers 20 to 30% savings compared to a classic one-bedroom apartment rental, while integrating services and shared spaces.

Co‑working follows a similar trajectory. The Indian shared workspace market, estimated at about $0.71 billion in fiscal 2023‑24, could exceed $1.5 to $2 billion by the start of the next decade, with a growth rate close to 13.5%. Flexible space operators now account for up to 16‑18% of office leasing in major cities, driven by demand from start‑ups, SMEs, and even large companies seeking flexibility.

Sustainability and green buildings: A new standard

Another major evolution: the rise of sustainable construction. Long considered a niche segment, environmental certification is gradually becoming a standard for new projects, particularly in commercial real estate.

The economic interest is far from negligible. A JLL study shows that certified office buildings can command rents about 11% higher and valuation premiums on resale of around 21% compared to conventional buildings, with rental premiums in some cases reaching up to 24%. Vacancy rates are lower, and yields can be up to 7% higher.

Authorities encourage this movement through building energy efficiency codes (ECBC), rating systems like GRIHA or IGBC, tax incentives (accelerated depreciation for certain green equipment), density bonuses (additional FSI of 3 to 15% in some jurisdictions), or property tax rebates. Many major developers – DLF, Godrej Properties, Tata Housing, Mahindra Lifespace, Lodha – have made green certification a central axis of their strategy.

Monetary policy, credit, and market outlook

The trajectory of Indian real estate remains closely linked to interest rates and credit. After a phase of significant increase between 2022 and 2023, which saw home loan rates exceed 9% again, the Reserve Bank of India has begun an easing cycle.

For borrowers, each 50 basis point reduction can represent significant savings. Simulations show that on a 50 lakh rupee loan over 20 years, a 0.5% drop in the rate can save over 3 lakh in interest over the term, and a 1% reduction can significantly shorten the loan duration or strongly reduce the monthly installment. On a larger scale, each tranche of 1 lakh crore rupees disbursed in housing loans is expected to generate between 300,000 and 400,000 direct and indirect jobs, giving a strong macroeconomic dimension to housing credit policy.

Conclusion: A two‑speed market, between opportunity and social risk

Current trends in the Indian real estate market paint a picture of a sector both expanding vigorously and facing formidable challenges. On one hand, the rapid growth of mid and high‑end residential, the spectacular rise of offices and warehouses, the influx of foreign capital, the emergence of REITs, PropTech innovation, and the accelerated adoption of environmental standards make India one of the most dynamic real estate markets in the world.

Solutions exist on paper, however: more ambitious mobilization of public land via targeted PPPs, reasonable increase in development norms (FSI) in well‑served areas, concessional financing for developers engaged in affordable housing, widespread adoption of single‑window approvals, integration of fast and economical construction technologies, taxation of vacant urban land to limit speculation, strengthening of affordable rental programs, extension of SWAMIH‑type funds, and above all, finer articulation between housing, transport, employment, and environmental policies.

Cyril Jarnias

Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.

On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.

Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.

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