Residential Real Estate Booms in 2024, But Affordable Housing Challenges Loom for 2025
This year has been remarkable for residential real estate in India, with pre-sales across the top seven cities expected to hit ₹5.1 lakh crore by December, according to a report by JLL. Despite this success, analysts have noticed that while home prices grew by 10-11%, the overall area sold hasn't increased much. This trend shows a focus on premium and luxury homes, while affordable and mid-range housing continues to face challenges. Experts believe this could persist in 2025 unless the Reserve Bank of India cuts interest rates and inflation eases.
Luxury Housing Leads the Way
Demand for luxury and ultra-luxury homes has been the star performer in 2024, with more growth expected next year, according to Colliers. Buyers prefer ready-to-move-in homes from reputed developers, a trend that began after the COVID-19 pandemic. For instance, DLF, one of India’s top real estate developers, sold out its high-end Privana West project within just three days, thanks to strong interest from wealthy individuals and non-resident Indians (NRIs).
Luxury developers are expanding beyond their traditional cities. Delhi NCR and Bengaluru-based companies are entering the Mumbai market, while Mumbai-based developers like Birla Estates and Tribeca are moving into Bengaluru and Delhi NCR. Tribeca, known for its Trump Towers projects, has ambitious plans for 2025.
Tier 2 and 3 Cities Are Growing Too
According to Boman Irani, President of CREDAI, demand has surged not just in metro cities but also in smaller towns. He suggested that redefining affordable housing, increasing tax benefits under Section 80C, and potential interest rate cuts in the 2025 budget could further boost affordability.
Challenges for Affordable Housing
On the other hand, affordable housing—homes priced below ₹50 lakh—has faced a slowdown. High interest rates, inflation, and stagnant wage growth have made it harder for first-time buyers to make purchases. Experts believe massive infrastructure projects and lower taxes on affordable homes could encourage developers to focus more on this segment.
Major Cities and Developers in the Spotlight
Delhi NCR saw significant growth in luxury housing, especially in areas like Gurugram, Noida, and even Faridabad. In Mumbai, major players like Prestige Estates and Sobha have announced plans for premium projects. Sobha also plans to expand into new markets like Noida and Mumbai, promising high-quality homes.
PropTech and Innovation
Ajjay Parge, founder of Qubit India, highlighted the role of technology, particularly PropTech, AI, and sustainable practices, in transforming the sector. By 2047, PropTech is expected to grow to represent 12-13% of the real estate market.
A Look Ahead
Looking forward to 2025, developers expect luxury housing to dominate, driven by higher disposable incomes and a preference for sophisticated homes. Infrastructure upgrades and a renewed focus on homeownership are also expected to keep the sector buzzing. Developers are adapting to changing buyer preferences, ensuring a mix of exclusivity, amenities, and prime locations to meet the demand.
