A real growth story

Home-buyer demand in the residential market remained robust in 2024, driven by stable home loan rates, steady income levels and improved affordability across most cities. As a result, annual sales volumes reached a 12-year high of 350,612 residential units, reflecting a 7 per cent growth (y-o-y). Mumbai retained its position as the largest residential market, achieving its highest sales volume in over 13 years, with 96,187 units sold in 2024. This accounted for 27 per cent of total sales across India, says a Knight Frank India’s latest report. 

Hyderabad and Pune also set new records in primary home sales, with annual volumes of 36,974 and 52,346 units, respectively. Kolkata recorded the highest percentage growth at 16 per cent, followed by Ahmedabad at 15 per cent and Mumbai at 11 per cent. The National Capital Region (NCR), however, experienced a slight decline, with sales volumes contracting by 4 per cent in 2024, adds the report.

“The residential market has had a tremendous run since 2020, with 2024 sales volumes culminating in a 12-year high,” affirms Shishir Baijal, chairman & managing director, Knight Frank India. The premiumisation trend has intensified, as the market continues to shift towards the higher ticket-sizes, with products much better suited to the increasing lifestyle needs of the demanding consumer. The overall improvement in market health metrics, stable economic and interest rate scenario, along with the still strong momentum, hold enough tailwinds for the market as it steps into the new year.”

“Housing demand continued unabated in 2024, led largely by end-users,” says Anuj Puri, chairman, Anarock. “The year 2025 looks promising for the housing sector. Data trends indicate that there is a healthy pipeline of new supply by listed developers in 2025. High-end and luxury homes are expected to perform exceptionally well. As long as the Indian economy remains strong, with no major impact of global headwinds, including geopolitical tensions, sales will remain healthy and prices will continue to see an upward trend. Prices may not grow to the extent seen in 2024, but increasing land and input costs will prevail on developers to increase property prices. We can also expect some rate cuts by the RBI, which would reduce interest rates for homebuyers. Of course, a lot also depend on what the upcoming Union Budget holds in store. We particularly hope for fresh measures to revive affordable housing in 2025”. 

As the Union Budget 2025-26 approaches, the real estate sector is pinning high hopes on the Modi 3.0 regime. Amid declining real estate activity in the second half of 2024, the sector anticipates government measures to revive overall consumption. In general, the upcoming budget is expected to emphasise maintaining economic stability and fostering growth, especially in light of the uninspiring GDP numbers from the past two quarters. Stimulus measures for SMEs, MSMEs, job creation, and skilling initiatives are anticipated to further propel economic activity.

“For the real estate sector, key expectations include industry status recognition and a revival of the affordable housing segment,” adds Puri. “Once a promising sector, affordable housing – homes priced under R40 lakh – has struggled post-pandemic, with demand and supply shrinking significantly.” According to an Anarock data, the sales share of affordable housing fell to a mere 18 per cent in 2024 from over 38 per cent in 2019. Similarly, its share of total housing supply in the top seven cities dropped to 16 per cent in 2024 from nearly 40 per cent in 2019.

“This stark decline highlights the urgent need for intervention,” avers the Anarock chief. “Affordable housing requires focussed attention and targeted benefits, which have been lacking in the past two years. Tax breaks to boost supply and enable buyers are crucial, but the challenges go deeper. A critical issue remains the lack of urban land, particularly in areas where affordable housing is most needed. To address this, the government could release centrally controlled land – managed by agencies like the Indian Railways, Port Trusts, and the Department of Heavy Industries – for affordable housing projects”.

Credit-Linked Subsidy

Additionally, he has urged the Union government to reintroduce the Credit-Linked Subsidy Scheme under PMAY. The scheme for EWS/LIG households, which expired in 2022, should be reinstated to incentivise first-time buyers of affordable homes. It could also extend to loans for new construction or adding essential features. The tax holiday under Section 80-IBA of the Finance Act, 2016, was a major incentive that boosted affordable housing supply. Reintroducing this benefit could be transformative, offering substantial tax breaks to developers focussed on affordable housing projects. 

Moreover, according to Puri, the current definitions of affordable housing, based on size, price and buyer income, require urgent revision. While the size criterion (60 sq m carpet area) is reasonable, the price cap of Rs45 lakh is unrealistic in high-cost cities like Mumbai. The cap should be raised to at least R85 lakh in Mumbai and Rs60-65 lakh in other metro cities to reflect market realities. Such revisions would enable more properties to qualify as affordable housing, granting buyers access to lower GST rates (1 per cent without ITC) and other subsidies.

According to a Colliers report, steady rise in average housing prices can have a stabilising effect on the residential market in 2025, especially in the affordable housing segment. If enabling conditions prevail, a reduction in benchmark lending rates can add buoyancy to the housing market in 2025. Within residential real estate, demand for luxury and ultra-luxury segments will witness higher growth, as compared to affordable and middle-income segments. “Developers will continue to recalibrate their strategies and be selective in launching new projects,” remarks Badal Yagnik, CEO, Colliers India. “Amidst sustained housing demand, inventory levels, thus can drop further over the next few quarters. Ready-to-move-in properties and reputed developers with established project execution capabilities will continue to be preferred by homebuyers in 2025”.

“We saw a substantial increase in demand for luxury real estate last year and we expect it to continue in 2025,” says Kalyan Chakrabarti, CEO, Emaar India. “We are optimistic that residential demand will continue to be strong and the luxury real estate market will witness a continued demand due to stronger macro-economic factors, combined with evolving lifestyle preferences. Rapid urbanisation, better connectivity and cost advantages is expected to make Tier II cities hotspots for residential projects in the future. At Emaar India, we would continue to remain committed to designing homes that align with customer preferences, offering bespoke luxury and convenience, through a transparent approach, a hallmark of Emaar’s values, credibility and commitment”.

Boman Irani, president, CREDAI, is of the view that the year 2024 has been a defining chapter for India’s real estate sector. Backed by the government’s unwavering commitment to infrastructure development and policies to promote home-ownership, the sector has witnessed robust growth across residential, commercial and emerging asset classes. Stable interest rates, improved transparency and the continued push for affordable housing have strengthened buyer confidence, particularly among first-time home-owners. Average housing prices rose by 11 per cent y-o-y, reflecting robust demand, particularly in cities like Pune and Chennai, which have recorded significant annual drops in unsold inventory at 13 per cent and per cent, respectively.

“We are witnessing a significant shift in home-buyers’ perception towards green housing and a surge in PropTech adoption,” observes Irani. “Buyers today are seeking more than just homes; they are investing in experiences. While the real estate sector still faces policy-related roadblocks that hinder its full potential, we are optimistic about the government streamlining processes to expedite project approvals and reduce costs. Looking ahead, redefining affordable housing, expanding 80C benefits, and potential rate cuts in the upcoming budget could further enhance affordability. The sector stands poised to drive economic growth in 2025, aligning with evolving buyer aspirations for quality, sustainability, and experiences beyond just homes”.

“In 2024, India’s real estate market experienced a profound transformation, powered by strong urbanisation, economic resilience and the evolving lifestyles of home-buyers,” says Niranjan Hiranandani, managing director, Hiranandani group of companies. “The residential sector, especially luxury housing, witnessed remarkable growth, propelled by rising disposable incomes and a burgeoning demand for comprehensive living experiences. Government infrastructure initiatives have spurred demand across megapolis and Tier II cities. Periodic structural reforms have created a secure market environment for investors to make informed decisions. Inflation and interest rates have stagnated for some time, causing challenges for affordable housing. Fiscal intervention is needed to stimulate demand. Upon the advent of the new state government, we pin high hopes on regulatory efficiencies, approval clearances that are expedited and cost optimisation for real estate development premiums to ensure that the sector remains viable and affordable”.

Strong growth

The year 2024 was a seminal one for the real estate industry, contends Dhaval Ajmera, director, Ajmera Realty & Infra India Ltd, Mumbai. “The market has now witnessed four consecutive years of growth post-pandemic. It has grown by an increased demand for larger homes as buyers seek more space for work and leisure. Home-buyers are willing to invest in properties from reputed builders, who offer a home and a lifestyle. The shift in preferences has also led to a boom in luxury housing. Buyers have shifted their preference from merely housing to investing in a lifestyle that mirrors aspirations. Real estate continues to experience strong growth as investors and homebuyers recognise the potential. Looking ahead to 2025, the sector holds potential and promise.

“The year 2024 has been an encouraging period for the real estate sector, with markets across the country witnessing positive momentum, a trend that continues into 2025,” enthuses Aakash Ohri, JMD & chief business officer, DLF Homes. “Overall, the demand for luxury homes has remained resilient, contrary to the perception of a slowdown, as buyers increasingly seek expansive, well-designed residences with world-class amenities that cater to their elevated lifestyles. This trend extends beyond metropolitan cities to mini-metros and smaller towns near major urban centres, with a growing preference for vacation homes reflecting evolving buyer aspirations. Additionally, Delhi is rapidly catching up with Gurugram in the luxury high-rise development space, with projects that meet global standards in architecture, amenities, and lifestyle offerings”.

According to Madhur Gupta, CEO, Hero Realty, “The real estate landscape reflects a transformative shift, with evolving buyer preferences and market dynamics shaping the sector. The growing demand for premium residential properties in both established cities and emerging locations has underscored a change in aspirations. All these developments are great signs for the real estate market, indicating further growth in the region”.

“The residential real estate sector in India is set for robust growth in 2025, driven by a combination of evolving consumer preferences, rising incomes, significant infrastructure developments and a heightened demand for both premium and mid-range housing options,” says Praveer Shrivastava, senior executive VP, residential, Prestige group. “Cities like Bengaluru, Hyderabad, Mumbai and Delhi-NCR are on a positive trajectory for growth. This momentum is fuelled by several key factors, including significant infrastructure development projects that enhance connectivity and accessibility. There is also a rising demand for premium properties, as more individuals and families seek high-quality living spaces that offer modern amenities and comfort. Furthermore, the desire for an elevated lifestyle, characterised by vibrant communities and a range of recreational and cultural options, is attracting potential buyers and investors to these urban areas. This combination of factors creates a promising outlook for the residential real estate market in these regions”.

Dhruv Agarwala, group CEO, Housing.com & PropTiger.com believes that India’s real estate sector is poised for a remarkable future, cementing its position as one of the most sought-after asset classes across diverse investor categories. Looking ahead, the sector is set to build on a set foundation. Beyond achieving growth milestones, India’s housing market is moving towards greater organisation and professionalism, aligning more closely with the standards of developed economies. This evolution will not only boost investor confidence but also ensure sustainable, long-term growth for the sector.

“The year 2025 looks quite upbeat, with the industry poised to experience robust growth numbers and volumes,” states Ravindra Pai, MD, Century Real Estate. “Real estate will remain a preferred asset class for wealth creation, driven by urbanisation, infrastructure upgrades and a growing appetite for high-quality living. Homebuyers are purchasing at younger ages, viewing real estate as a blend of living space, investment and modern amenities. The growing focus on community living and common areas boosts residential appeal, while the declining average age of buyers is set to sustain this trend in 2025”.

“The year 2024 has been phenomenal from a home sales standpoint, with quite a few milestones. We have witnessed a rise in purchase power despite tax pressures on home buyers and how real estate among other physical investment avenues has been a preferred asset class over the last five years. We anticipate a similar momentum in 2025 and a complete transition of home buyers to mid-segment and luxury housing,” says Amit Jain, chairman & managing director, Arkade Developers.

Meanwhile, in its latest assessment, Knight Frank highlights that 2024 was a landmark year for India’s office market, with gross leasing activity reaching unprecedented levels. Total office space absorption during the year stood at an impressive 71.9 million sq ft, surpassing the previous peak achieved in pre-pandemic 2019 by a remarkable 19 per cent. On a year-on-year (y-o-y) basis, office space transactions in 2024 recorded a substantial 20.8 per cent growth compared to 2023, underscoring the sector’s dynamic performance.

This stellar achievement reflects India’s economic resilience, sustained GDP growth, robust domestic consumption, and the country’s increasing prominence in the global economic landscape. The exceptional demand for office spaces underscores the confidence of global and domestic businesses in India’s thriving business environment, cementing its position as a preferred destination for investment and expansion.

India facing business anchored the market, accounting for 36 per cent of the total transactions at 25.9 million sq ft, while GCCs represented 31 per cent with 22.5 million sq ft. Flex space operators were highly active, leasing 15.7 million sq ft, a 52 percent y-o-y growth. Third-party IT services also saw a 21 per cent y-o-y increase, reaching 7.9 million sq ft.

Continuing its premier position, Bengaluru recorded its historic-best office transactions of 18.1 million sq ft in 2024, which was higher by 45.1 per cent over 2023. This was followed by the National Capital Region (NCR) with office leasing activity: totalling 12.7 million sq ft; Mumbai: 10.4 million sq. ft; Pune: 8 million sq ft; and Ahmedabad: 3 million sq ft.

As leasing activities remained robust, new office completions also saw a rise reaching 50.3 million sq ft in 2024, registering 17 per cent rise y-o-y. However, as supply remained subdued, in comparison to leasing volumes, rents firmed up further across all markets over the course of the year encouraged by demand and a relatively lower supply. Hyderabad led the rental growth with 7 per cent y-o-y, followed by Bengaluru and Chennai at 6 per cent y-o-y, respectively in 2024