Market Reports

India’s Real Estate Sector

1	Quick facts: Indian Real Estate Sector
2	Overview: Indian Real Estate Sector
3	Promising Real Estate Investment Locations in India
4	Government Initiatives
5	Megatrends in the Indian Real Estate Sector
6	Why Invest in India’s Real Estate?

Quick Facts: Indian Real Estate Sector

In India, the real estate sector is the second-highest employment generator after the agriculture sector
The construction industry ranks third among the 14 major sectors in terms of direct, indirect, and induced effects in all sectors of the economy
The residential sector has experienced a strong revival in housing demand across the top seven cities: Mumbai, Delhi-NCR, Bengaluru, Hyderabad, Chennai, Kolkata, and Pune
In 2023, housing sales in the top 7 cities reached a record high of 476,530 units, exceeding the previous peak of 364,870 units in 2022
The average housing prices across these top 7 cities have grown at an average of 25%-60% over the past decade, driven by strong demand
By 2030, the real estate sector is expected to become a trillion-dollar market

Overview: Indian Real Estate Sector

The real estate market in India has witnessed remarkable growth in recent years. In 2020, the market was valued at INR 15 trillion, showing a strong foundation. By 2025, it is projected to expand significantly to INR 54 trillion, reflecting a rapid surge in demand and development. Looking further ahead, the market is expected to reach INR 84 trillion by 2030, demonstrating the country’s robust real estate potential and ongoing urbanization trends.
In 2024, the housing market is thriving, especially in the premium and luxury segments, driven by urbanization, higher incomes, and changing buyer preferences. Major cities like Mumbai, Pune, Bengaluru, and Hyderabad are seeing growth in luxury property launches and sales. Currently, 61% of residential supply is priced above INR 45 lakhs, and by 2030, over 87% of demand will be for homes in this range. The average home size has increased by 11% annually, reflecting a preference for larger spaces.
India’s commercial real estate sector is structured and competitive. The growing economy, increased digitalization, expansion of the IT/ITeS industry, and several government initiatives have driven up demand for commercial properties. With the easing of FDI regulations, global investments have flowed in, boosting the development of shopping malls and other modern retail spaces. Simultaneously, the rise of the digital economy and e-commerce has fueled the need for coworking spaces, advanced warehousing solutions, and logistics centers. Retail is also expanding, with 41 million sq. ft of retail developments planned in the top 7 cities from 2024 to 2028.

Promising Real Estate Investment Locations in India

India’s top eight cities Delhi, Mumbai, Pune, Ahmedabad, Bangalore, Chennai, Hyderabad, and Kolkata are key drivers of economic activity, offering strong infrastructure, healthcare, education, and connectivity. High demand for residential properties in these tier-1 cities, fuelled by job opportunities and quality of life, has led to rising property prices. Infrastructure improvements further boost this demand, making these cities attractive for investment with the potential for substantial returns. Additionally, luxury homes are in increasing demand.

Tier-2 cities in India present an appealing option for real estate investment due to their affordable living costs and evolving infrastructure. Cities such as Kochi, Indore, and Lucknow are witnessing fast-paced growth driven by their rising potential. Though property prices are lower than in tier-1 cities like Mumbai, these cities offer substantial prospects for appreciation as they continue to develop. The growing demand for properties in key areas is pushing up appreciation rates, attracting investors seeking quick returns.

Government Initiatives

Pradhan Mantri Awas Yojana – Urban 2.0 (PMAY-U 2.0)

A ‘Housing for All’ Mission aimed at providing central assistance to 1 crore urban poor and middle-class families for constructing, purchasing, or renting affordable homes. This initiative has been implemented for over 5 years, starting in September 2024.
PMAY-U 2.0 is carried out through four key components: Beneficiary Led Construction, Affordable Housing in Partnership, Affordable Rental Housing, and Interest Subsidy Scheme.

The Accelerator Affordable Sustainable Housing Accelerators-India (ASHA-India).

The initiative aims to support emerging construction technologies by offering incubation and acceleration for both pre-prototype and post-prototype technologies.
Pre-prototype technologies are in the ideation or early prototyping stage and require long-term incubation to reach a viable product, while post-prototype technologies are market-ready but need strategic guidance for mainstream adoption.
The ASHA-India Centers will also develop design guidelines, construction manuals, and other resources to effectively implement these technologies. These centers will be established at five institutions: IIT Bombay, IIT Kharagpur, IIT Madras, IIT Roorkee, and CSIR-NEIST Jorhat.

The Special Window for Affordable and Mid-Income Housing (SWAMIH)

A ‘Special Window’ fund to provide priority debt financing for the completion of stalled housing projects that are in the Affordable and Middle-Income Housing sector. In addition to the 50,000 dwelling units already delivered to homebuyers, another 40,000 units are set to be completed by 2025.
To further accelerate this, the SWAMIH Fund 2 has been created as a blended finance facility, with contributions from the government, banks, and private investors. This fund, totaling INR 150 billion, aims to facilitate the rapid completion of an additional 1 lakh units.

Global Housing Technology Challenge

MoHUA launched the Global Housing Technology Challenge – India (GHTC-India) to identify and promote a range of innovative, sustainable, eco-friendly, and disaster-resilient construction technologies for the housing sector.
Out of the identified 54 technologies, Six Light House Projects using six distinct technologies were finalized to showcase the use of these technologies for further mainstreaming in the country. These projects are being implemented in the cities of Chennai (Tamil Nadu), Rajkot (Gujarat), Indore (Madhya Pradesh), Lucknow (Uttar Pradesh), Ranchi (Jharkhand), and Agartala (Tripura).

Megatrends in the Indian Real Estate Sector

Urbanization and Migration to Cities

Rising Population in Urban Areas:
India’s urban population is expected to grow rapidly, driving demand for housing and commercial spaces in cities.
Increased Demand for Infrastructure:
Expanding cities will require upgrades in infrastructure, such as transportation, utilities, and public services, to accommodate the growing population.
Focus on Smart Cities:
The government’s “Smart Cities Mission” is driving investments in high-tech urban planning, sustainable development, and digital infrastructure.
Suburban Growth and Satellite Townships:
The rise of satellite cities around major metros like Delhi, Mumbai, and Bengaluru offers affordable housing options with easy connectivity.

Technology Integration and Innovation

PropTech Growth:
The emergence of Property Technology (PropTech) startups is revolutionizing property search, management, and investment, with tools like virtual tours, AI-based property pricing, and blockchain for transparent transactions.
Sustainable Construction Technology:
The rise of eco-friendly construction materials, energy-efficient designs, and green building certifications (e.g., LEED) is reshaping the real estate sector.
Smart Homes and IoT:
Increasing demand for smart homes equipped with automation systems for security, lighting, and energy efficiency is driving innovation in residential properties.
3D Printing and Modular Construction:
These technologies are reducing construction time, lowering costs, and offering custom designs for real estate projects.

Growth of Commercial Real Estate

Increased Demand for Office Spaces:
With the revival of the economy and the return to office spaces post-pandemic, the demand for quality office space in urban centers is on the rise.
Co-Working and Flexible Office Spaces:
A shift towards flexible work environments is driving growth in the co-working space market, catering to freelancers, startups, and corporates.
Expansion of E-commerce Warehousing:
The boom in e-commerce is leading to increased demand for logistics and warehousing facilities, especially in Tier 1 and Tier 2 cities
Rise in Commercial Investments: Institutional investors and Real Estate Investment Trusts (REITs) are focusing on high-grade commercial properties in prime urban areas.

Sustainability and Green Building Development

Green Certifications and Energy Efficiency:
A strong focus on sustainable practices with the growth of green buildings certified by GRIHA, LEED, and IGBC is gaining popularity
Waste Management and Water Conservation:
Developers are incorporating rainwater harvesting, water recycling, and waste management systems in residential and commercial projects
Sustainable Urban Planning:
The integration of green spaces, walkable areas, and eco-friendly public transport systems in new developments is becoming a priority for urban planners
Renewable Energy Adoption:
Developers are increasingly using solar power and other renewable energy sources in their projects to reduce carbon footprints

Why Invest in India’s Real Estate

High Economic Growth Potential

India’s GDP Growth:
India’s economy is expected to grow at 6-7% annually in the next decade, one of the highest rates among major economies.
Strong Demand for Housing and Infrastructure:
Rapid economic growth is driving demand for residential, commercial, and industrial properties, creating lucrative investment opportunities.
Government’s Focus on Infrastructure Development:
The government is investing heavily in infrastructure, with projects like the INR 100 trillion National Infrastructure Pipeline (NIP) to boost urbanization and connectivity.
Young Workforce Driving Consumption:
With over 65% of India’s population under the age of 35, the workforce is large, dynamic, and consuming, leading to demand for housing and commercial properties.

Growing Middle-Class and Affluent Population

Rising Disposable Incomes:
India’s middle class is expanding rapidly, with an estimated 600 million people by 2025. This creates a demand for better housing and retail spaces
Surge in Luxury and Premium Real Estate:
There is an increasing demand for premium and luxury properties in top cities, especially among the rising affluent class. The luxury real estate market is expected to grow at a CAGR of 6-8%.
Emerging Urban Centers:
Cities like Bengaluru, Pune, and Hyderabad are witnessing growth in the number of high-income households, further boosting demand for quality residential and commercial spaces
Significant Increase in Homeownership:
With affordable housing schemes and low interest rates, homeownership rates have increased in Tier 1 and Tier 2 cities, expanding the market for real estate investments

Attractive Returns on Investment

Appreciation of Property Values:
Real estate in top cities like Delhi, Mumbai, Bengaluru, and Chennai has seen an average capital appreciation of 8-12% per annum in recent.
High Rental Yields:
Cities like Bengaluru, Hyderabad, and Pune offer rental yields of 3-5% annually for residential properties, higher compared to other global markets.
Real Estate Investment Trusts (REITs):
The introduction of REITs in India in 2019 has provided an easier way for investors to access high-quality commercial properties, offering liquidity and attractive dividends.
Long-Term Capital Appreciation:
Real estate in India offers long-term wealth creation potential, supported by continuous urban expansion, rising disposable incomes, and increased industrial activity.