Mr. Amit Chopra, President - NAR India
"Real estate is the only asset that is also a basic need. We don't just build markets; we shape lives, communities, and the fabric of our nation."
As 2025 draws to a close and we step into 2026, India's real estate sector stands at an inflection point. Long seen as a barometer of economic health, the sector has once again demonstrated its cyclical nature and underlying resilience. After several years of strong growth, 2025 emerged not as a year of disruption, but as a reset - a phase of recalibration that has strengthened the foundation for sustainable progress ahead.
2025: A Year of Market Realities
The past year tested the sector with a mix of global and domestic challenges. Geopolitical uncertainty, tighter macroeconomic conditions, elevated borrowing costs, and localised policy disruptions made buyers more cautious. Sales volumes softened in several markets, and conversion cycles lengthened even for well-planned launches.
Yet, this was not a uniform slowdown. Residential demand did not collapse; it fragmented. While mid-segment projects in some cities faced muted traction, high-value transactions remained steady. This selective slowdown reflects growing market maturity and sharper segmentation, not distress.
Luxury and Premium Housing: The Clear Growth Engine
If one segment defined 2025, it was luxury and premium housing. In the first half of the year alone, luxury home sales rose by nearly 85% year-on-year, with close to 7,000 units sold across major Indian cities. Delhi-NCR led the surge, followed by Mumbai, Bengaluru, Hyderabad, Chennai, Pune, and Kolkata. In many markets, luxury and premium homes accounted for a disproportionately high share of both new launches and absorption.
This momentum is rooted in structural shifts. India continues to see a rise in high-net-worth and ultra-high-net-worth individuals, including NRIs, who increasingly view Indian real estate as a stable wealth anchor. Record-breaking penthouse sales and rapid sell-outs of marquee projects reinforce a clear message: demand at the top of the pyramid remains resilient, even when broader volumes moderate.
Affordable and Mid-Market Housing: A Segment Under Strain
In contrast, affordable and mid-income housing - critical to inclusive urban growth - showed visible stress. The share of homes priced below â¹40 lakh declined sharply across major markets, reflecting both reduced supply and weaker demand.
This trend carries important policy implications. Rising land costs, construction expenses, and income pressures are compressing the traditional housing pyramid, making first-time ownership harder to achieve. Reviving this segment will require focused policy support, including fiscal incentives, construction-linked subsidies, and measures that improve feasibility without compromising quality.
Pricing and Inventory: Stability, Not Excess
Despite slower transactions in some pockets, average housing prices continued to firm across key cities. Higher land costs, sustained premium demand, and limited quality supply kept prices stable to upward. Unsold inventory levels declined modestly, indicating steady absorption even in a cautious environment.
This combination of firm pricing and controlled inventory points to structural tightness rather than speculative excess - a healthy sign for long-term stability.
Policy Signals with Long-Term Impact
One of the most encouraging developments of late 2025 was regulatory recognition of real estate as a legitimate long-term investment asset. The Pension Fund Regulatory and Development Authority (PFRDA) allowing pension fund investments in REITs and InvITs is a significant step toward unlocking institutional capital in commercial real estate and infrastructure.
Additionally, proposals to permit debt investments in real estate from NRIs and OCIs could materially lower funding costs for developers if implemented. These moves signal a broader policy understanding that real estate is not just about housing, but a core pillar of India's economic architecture.
Outlook for 2026: Cautious Optimism
The road ahead suggests selective but steady recovery.
Luxury and premium housing will continue to perform well, though growth may moderate after the exceptional post-2020 surge. Mid-income and aspirational segments are likely to strengthen as price discovery stabilises and consumer confidence improves. Affordable housing must remain a policy priority to ensure broad-based demand and social balance.
Equally important will be policy reform. Recognising real estate as an industry, improving access to credit, and formalising the role of professional intermediaries will enhance transparency and unlock growth. These are not optional reforms; they are essential if India is to realise its $40-trillion economy ambition by 2047.
Article By: Mr. Amit Chopra, President - NAR India
