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India's USD 500-billion real estate market saw a second consecutive drop in new home sales volume in 2025, with a 14 per cent decline following last year's 4 per cent fall, mainly due to high prices affecting affordability. While volume fell, the value of sales grew because of price appreciation and a shift toward luxury homes. Affordable and mid-income housing faced limited supply. Commercial real estate and institutional investments surged, driven by office, retail, and warehousing demand. Developers and industry bodies expect 2026 to show calibrated growth supported by economic stability, lower interest rates, and potential policy support.
India's real estate market, valued at USD 500 billion, recorded its second consecutive annual decline in new home sales volume in 2025, primarily due to high property prices impacting affordability. Sales volumes fell 14 per cent this year after a 4 per cent dip in 2024. Developers are now relying on lower mortgage rates, steady GDP growth, and possible incentives in the upcoming Union Budget to restore demand for residential properties and boost market confidence in 2026. Advertisement
Despite lower volumes, builders saw some reassurance in the increase in the overall value of new home sales. This growth was driven by significant price appreciation in the post-pandemic housing cycle and a deliberate focus on luxury residences to achieve higher profit margins. This trend has highlighted a widening divide in buyer behavior: premium homes continue to attract wealthy investors and aspirational buyers, while entry-level and mid-income segments the backbone of urban housing remain constrained.
Data from Anarock showed that across seven major cities, housing sales dropped 14 per cent to around 5.96 lakh units, whereas sales value rose 6 per cent to INR 6 lakh crore. Anarock Chairman Anuj Puri noted that 2025 was marked by global uncertainties, layoffs in the IT sector, and ongoing trade disputes, which kept the market cautious. He also observed that the rapid double-digit price increases seen in previous years slowed to single digits.
CREDAI National President Shekhar Patel said that despite global volatility, housing demand remained resilient. The consolidation of demand toward large branded developers strengthened further in 2025. Leading companies including Godrej Properties, DLF, Prestige Group, Lodha Developers, and Signature Global recorded sales bookings of INR 92,500 crore between April and September, FY26. Luxury housing continued to grow, while affordable homes saw a decline in both launches and sales. High land prices were cited as a reason for limited inventories in the affordable and mid-income categories, with units under INR 1 crore particularly scarce, contributing to the drop in overall volume.
In contrast, India's commercial real estate performed strongly, with record leasing activity in office, retail, and warehousing segments. Institutional investments hit a record USD 10.4 billion, a 17 per cent increase year-on-year. Domestic and foreign investors were drawn by strong returns, with office spaces capturing 58 per cent of the investments. Demand for conventional and managed office spaces has grown as foreign companies establish global capability centers, attracted by skilled labor and competitive rents averaging USD 1 per sq ft in major cities. Industrial and warehousing leasing also reached record levels across tier-I, II, and III cities, fueled by light manufacturing, logistics, and e-commerce operations.
Several developers tapped capital markets to expand. Knowledge Realty Trust, backed by Sattva Group and Blackstone, raised INR 4,800 crore through a REIT public issue. Raymond Group separated its real estate business to list it independently. The year also saw Adani Group acquire debt-laden Jaiprakash Associates Ltd through insolvency. Buyers of Amrapali projects in Delhi-NCR received their flats, while investors in Unitech, Supertech, and Jaypee Infratech projects continue to face delays.
Looking forward, CREDAI expects 2026 to bring steady, calibrated growth. Key priorities include smoother transmission of repo rate cuts, simplified GST, faster approvals, and better access to long-term capital. CREDAI and NAREDCO have reiterated their demand to revise the definition of affordable housing, raising the price cap to INR 90 lakh from INR 45 lakh. This adjustment, along with possible tax incentives in the upcoming Budget for affordable housing development, could boost both supply and demand. The sector also benefits from a strong economy and lower home loan rates, as the RBI reduced the repo rate by 125 basis points this year. Puri emphasized that if repo rate cuts continue and developers manage pricing, residential demand could rebound strongly in 2026.
Source PTI
5th Jun, 2025
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