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India’s residential real estate market has entered a new era; one not measured by the number of units sold but by the amount of revenue generated. According to the FY26 residential market projections of JLL India, a global real estate services company, the total housing sales value across India’s top seven cities is expected to touch Rs 6.65 lakh crore this year – a sharp 19% jump over last year.

And this sharp rise in sales value will come despite a marginal or stagnant growth in the number of units sold as the share of high-value properties in aggregate market is increasing disproportionately reflecting the market shift from volume to value, from affordability to luxury.

India’s residential housing growth story has revolved around volume for years; housing developers were comfortable to cater to the demand of the readily available middle class households, who were large in numbers and growing. But the dynamic changed dramatically following rising incomes and aspirations for luxurious living among urban professionals and new-age entrepreneurs. Cities like Gurugram, Bengaluru, Hyderabad and Chennai became the biggest drivers of luxury residential properties.

The rising demand for high-value luxury properties is, however, not sudden or accidental, it is backed by a deep behavioural and economic shift. This behavioural change was largely prompted by the corona pandemic when people were forced to stay at home and work from there. Later, homebuyers began to prioritise space, design and amenities over price while choosing to buy homes.

Of course, such a shift in favour of high-priced properties was possible because of rising disposable incomes. According to Hurun Report 2025 India has over 13 lakh high net worth individuals with investable assets of Rs.6 crore and above. To add to it, the NRI investors are buying luxury Indian real estate, especially in cities like Gurugram, Bengaluru and Mumbai spiralling the demand for such properties.

Taking advantage of this structural shift in demand the housing developers have steadily reduced the construction of affordable housing projects and instead focused on fewer but high-margin luxury properties, especially in large cities where land is increasingly becoming scarce,  with a view to maximise profits. To note, three out of every five houses sold in H1 2025 was priced at above rupees one crore.    

Thus, while the sales of affordable housing units valued at under `1 crore declined during the first half of 2025, that of apartments valued at rupees one crore and above increased by 6% during the same period. Apartments valued at rupees one crore and above represent approximately 62% of the total sales during the first half of 2025 against 51% in the same period year before. The rise in luxury housing’s share in total was largely driven by a 14% rise in the Rs. 3 – 5 crore housing segment.

This is uncertain how this structural shift in residential housing demand in favour of luxury properties will impact India’s real estate market. But the fact remains that every Indian, rich or poor, aspires to have his or her own home and is ready to pay for it.                 

The sharp growth and its increasing influence in value creation have attracted special attention from policy makers. The sector is deeply interlinked to a large number of allied industries including steel, cement and bricks. Higher economic growth led to rapid urbanisation and increasing disposable income of households accelerated the demand for residential properties. Moreover, various initiatives undertaken by the government such as investments in smart city projects, lower interest rate and tax exemption for interest on housing loans have also helped to expand the demand for residential houses.

The growth of the sector was also impacted positively by government reform policies. The three major reforms – the introduction of GST, the launch of RERA and the grant of infrastructure status to affordable housing properties – have had a massive and positive impact on the industry. The government’s vision of ‘housing for all’ and the grant of infrastructure status to compact, affordable residential homes saw an increase in the demand for low-cost homes.

The growth of the sector has a bigger role in the macroeconomic dynamics of the country. The real estate sector is projected to account for 13% of GDP in 2025. Recent projection by Statista shows that the sector’s contribution could rise to 15.5% by 2047, making it an even larger pillar of India’s economy.

Valued at an estimated $ 650 billion in 2025, it is the country’s second-largest employment generator after agriculture. The real estate and construction sector has been experiencing a significant hiring boom driven by a surge in post-pandemic project launches. The hiring boom is predicted to continue for several years as projects launched enter advanced stages requiring peak manpower.

According to a joint report of real estate consultancy firm Anarock and National Real Estate Development Council in 2024, the employment in the real estate sector has surged to about 71 million from 40 million in 2013. The sector now accounts for nearly a fifth (18%, precisely) of total employment in India, the report suggested. And if the real estate market reached the one trillion-mark by 2030 as projected, employment may further rise by another 20 million.

Housing sales declined in H1 2025

Backed by a steady economic growth India's real estate sector has emerged as a pivotal player in the country's development. The sector is one of the most dynamic and fastest-growing in the world and is touted to be a major contributor to the country’s aspiration to become a five trillion dollar economy. 

According to Knight Frank India, in the next 25 years, there will be an estimated 230 million units of housing requirement in India. The economic buoyancy and a steady GDP growth have increased the demand for commercial space too. The office stock has grown significantly from 278 million sq ft in 2008 to 898 million sq ft cumulatively across the leading eight cities in India, the report added.

However, the sector experienced a pivotal shift in 2025. Against a steady growth till date, the sector witnessed a decline in sales; the first post-pandemic contraction with overall residential sales declining by 13% year-on-year during H1 2025 to 1,34,776 units during January-June period.

This is reflected in the sharp rise in residential housing sales in India over the years, occasional fluctuations, notwithstanding. India’s real estate market is expected to reach $ 1 trillion-mark by 2030 – up from $ 120 billion in 2017. Retail, hospitality, and commercial real estate are also growing significantly, providing the much-needed infrastructure for India's growing development needs.       The decline in volume sales was largely led by Delhi NCR, Mumbai and Bengaluru markets. Together these three cities accounted for 80% of the total half yearly decline in sales in 2025. In actual numbers, sales in these three cities fell by 16,192 units with Delhi accounting for the largest number at 5,860 units followed by Bengaluru with 5,358 units.

And if Chennai remained the only major city that saw an increase in sales during H1 2025,  the market with just about 5% share in pan India map is a marginal player in overall reckoning.

Geographic distribution across India’s major metropolitan areas revealed concentrated market dynamics with divergent performance patterns. Delhi NCR, Bengaluru and Mumbai maintained their dominance, collectively accounting for over 58% of total residential sales across the country's seven major cities. This concentration reflects their status as key economic centres with strong employment growth and attractive income generator.

Reasons for decline in residential sales

Escalating construction costs, rising land prices and property taxes pose significant challenges to real estate developers and potential homebuyers. Affordability concerns can limit access to housing and impact the overall real estate market. With limited land availability for construction, outdated building technologies, the Indian real estate sector has been facing multiple issues.

The reasons for decline in residential properties in 2025 are as diverse as they are complex. The decline in sales during H1 2025 stems largely from soaring prices that made home buying unaffordable for many, coupled with broader economic uncertainties and geopolitical tensions also influenced buyer sentiments. 

Driven by rising demand for high-priced properties developers focused on higher-margin homes, in cities like Delhi-NCR, Mumbai, and Bangalore causing affordable housing to face pressure of inflated prices. Rapid price hikes in major cities priced out many aspirational buyers, with the affordable housing segment seeing significant dips in demand.

According to various consultancy reports average prices increased across major cities like Mumbai (8%), Delhi-NCR (14%) and Bangalore (14%). Under-construction premium properties saw some of the sharpest rises, up to 44% YoY in some markets. The All India House Price Index (HPI) increased 3.6% annually during the April-June quarter of the 2024-25 fiscal over the same quarter of the previous year.

Office space sales touch new record

While home sale volumes declined in H1 2025, the commercial real estate market witnessed a sharp uptrend. The office market  continued to demonstrate strong momentum despite significant global economic uncertainties and headwinds with gross leasing numbers hitting a new high of 39.45 million sq. ft in H1 2025 –  up by 17.6% over the same period of 2024. This was achieved on the back of a stronger-than expected Q2 growth (April-June) with global firms leading the charge. They accounted for a strong 61.5% share in leasing volumes with India’s continued prominence as a global talent hub shining brightly. 

In fact, Q2 2025 hit a record 20 million sq. ft in leasing volumes, marking the strongest-ever second quarter performance for any year. The market also outperformed expectations supported by the continued strength in domestic occupiers led demand that combined to lease 

7.7 million sq. ft in Q2 2025. The year remains cumulatively on track for the strongest annual performance by domestic firms. This sustained demand reflects corporate India's confidence in long-term growth prospects and the country's strategic importance in multinational corporations' global footprints.

Demand for high-quality offices remains strong across the major metros, with Bengaluru leading the pack for the fifth straight quarter. In fact, Bengaluru had its second-highest quarterly leasing volumes ever after Q4 2024. The city accounted for a significant 37.6% share of the quarterly leasing activity. Delhi NCR followed with a 20.8% share

Future prospects

Despite a fall in overall residential houses, property analysts feel that this apparent downturn reflects strategic market recalibration rather than fundamental weakness, as premium housing segments demonstrated exceptional resilience while the broader market adapted to evolving consumer preferences and economic conditions.

Indeed, the supply side demonstrated remarkable strategic adaptation, with developers making calculated portfolio adjustments. Thus, despite a sharp 13% fall in residential sales during the first six months of 2025 total new housing launches reached 225,001 units during January-September, representing only a modest 1% year-over-year decline. That is, property developers maintained confidence in long-term fundamentals while making tactical current market adjustments.

However, as expected from the recent trend in sales the new launch composition revealed clear strategic shifts towards premium segments. Despite marginal overall decline, homes priced above Rs one crore experienced substantial 5% surge in new launches, demonstrating developers' recognition of demand concentration patterns, Technology-focused metropolitan areas showed particular strength, with Bengaluru, Chennai, Hyderabad, and Pune collectively comprising 61% of year-to-date launches.

At the other end, the RBI’s move to cut repo rate consistently last year is expected to improve the sentiment of middle-income buyers to invest in home properties. RBI has lowered the repo rate four times in 2025, reducing the rate by a total of 125 basis points from 6.50% to 5.25%. A repo rate cut significantly helps homebuyers by reducing borrowing costs for banks, leading to lower home loan interest rates, cheaper EMIs for new and existing floating-rate borrowers

That the recent fall in real estate sales is only a temporary fluctuation is reflected in the faith kept by investors in the sector’s future prospect. Institutional investment in India’s real estate sector increased by 17% in 2025 compared with 2024, reaching an all-time high of $10.4 billion. For the first time since 2014, domestic institutional investors took the lead, accounting for 52% of the total investments in 2025. The remaining 48% came from foreign funds, with absolute foreign capital deployment also increasing year-on-year, especially from the US-based investors.