The trend marks a deepening of the two-speed dynamic in Indian real estate: the luxury and premium end continues to boom, while the affordable housing segment (below Rs 45 lakh) faces slower absorption and rising unsold inventory. This divergence has significant implications for developers, investors, and the broader Indian economy, which relies on real estate for roughly 7 per cent of GDP and 15 per cent of total employment.

Where Prices Are Rising Fastest

Savills India’s latest data shows that under-construction premium homes outperformed completed assets in terms of price appreciation during the past 12 months. Capital values in this segment rose as much as 36 per cent YoY across major cities, reflecting higher launch benchmarks, increasing land and construction costs, and robust demand.

NOIDA recorded the widest range of appreciation at 9 to 36 per cent YoY, driven by the Noida International Airport development at Jewar and upgraded expressway connectivity. Gurugram followed with a 2 to 19 per cent YoY increase, concentrated along the Dwarka Expressway and Southern Peripheral Road corridors. Bengaluru posted healthy gains of 13 to 15 per cent YoY, supported by IT-sector hiring and infrastructure upgrades including the Phase 2 metro expansion.

Completed premium homes showed steadier but still resilient growth, with values rising up to 20 per cent YoY. Bengaluru led this segment at 12 to 14 per cent, followed by Delhi (10 to 18 per cent) and NOIDA (10 to 20 per cent). Mumbai saw a more modest 4 to 7 per cent increase, though select micro-markets in the Bandra-Kurla Complex corridor outperformed significantly.

The Broader Market Picture

The 1 Finance Housing Market Index, based on RERA-registered transaction data, delivered a 10.2 per cent CAGR over five years, reaching 276 in December 2025. While earlier growth was driven by strong end-user momentum, the current phase is more measured, with inventory discipline shaping outcomes across cities.

New launches are expected to exceed 300,000 units in 2026, with Cushman and Wakefield projecting that the luxury segment will account for over 30 per cent of all new launches — up from 22 per cent in 2024. This shift reflects developers’ strategic pivot toward higher-margin products as land costs and regulatory compliance expenses under RERA continue to rise.

However, not all markets are thriving equally. Same-quarter absorption rates — the percentage of newly launched units sold within the quarter — softened through 2025 in Hyderabad, Delhi NCR, and Bengaluru for non-premium segments. Total housing sales data from earlier in 2026 confirms that the affordable segment is under pressure from inventory build-up and cautious buyer sentiment.

What Is Driving Premium Demand

Several factors are converging to sustain demand in the luxury segment. First, India’s growing high-net-worth population — estimated at 8.5 lakh households in 2026 — is increasingly viewing real estate as both a lifestyle asset and inflation hedge. Second, NRI buyers, attracted by a weaker rupee and improved RERA transparency, have significantly increased purchases in Bengaluru, Goa, and parts of Mumbai, according to industry data.

Third, the post-pandemic preference for spacious homes with wellness amenities, private terraces, and work-from-home infrastructure has persisted. Developers who invested in sustainable design — green-certified buildings, EV charging, and energy-efficient construction — are seeing faster sell-through rates and are commanding 10 to 15 per cent premiums.

The impact on personal finance and investment patterns is notable: the Union Budget 2026’s enhanced tax deductions for home loans up to Rs 5 lakh annually have further incentivised ownership in the premium segment, particularly among salaried professionals in the Rs 25 lakh to Rs 50 lakh annual income bracket.

Outlook and Risks

Analysts remain cautiously optimistic. Knight Frank India forecasts that residential prices across the top eight cities will rise 6 to 10 per cent in 2026, with the premium end outperforming the average. However, risks include the impact of global geopolitical tensions on financial markets and the RBI’s interest rate trajectory — any delay in anticipated rate cuts could slow mortgage demand in the second half of the year.

For buyers, the window for value purchases may be narrowing in high-growth corridors like NOIDA and Bengaluru’s outer ring road, where prices have already moved substantially. For developers, the challenge is maintaining quality and delivery timelines to justify premium pricing — a crucial factor as RERA enforcement tightens nationwide.

Source: Economic Times

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India Real Estate 2026 Housing Sales: The Record Quarter

Data from Anarock Property Consultants shows that combined housing sales across Mumbai Metropolitan Region (MMR), Bengaluru, Hyderabad, Pune, NCR (Delhi-Gurgaon-Noida), Chennai, and Kolkata reached approximately 1.45 lakh units in Q1 2026 (January-March). This represents a 14 per cent increase over the same period in 2025 and exceeds the previous quarterly record set in Q4 2024.

Mumbai continues to lead in absolute sales volume, accounting for roughly 30 per cent of total transactions. Bengaluru and Hyderabad are the fastest-growing markets, with annual sales growth exceeding 20 per cent, driven by the IT industry workforce and the expansion of global capability centres that have concentrated high-salary employment in these cities.

The property investment landscape has fundamentally shifted toward organised developers who can offer RERA-compliant projects with transparent timelines, quality construction, and amenity-rich lifestyle propositions. Buyers are willing to pay premium prices for reliability and brand reputation.

Luxury Segment: Rs 1 Crore-Plus Properties See 40 Per Cent Growth

The most dramatic trend is the explosion in luxury property sales. Homes priced above Rs 1 crore now account for over 40 per cent of total unit sales in metropolitan markets, up from approximately 25 per cent in 2021. In Mumbai’s premium micro-markets — Bandra, Worli, Lower Parel, and Andheri West — average transaction values have crossed Rs 3 crore, with ultra-luxury sales exceeding Rs 10 crore becoming routine.

The drivers are multiple. Post-pandemic lifestyle preferences have increased demand for larger homes with dedicated work spaces, balconies, and access to amenities such as swimming pools, gyms, and co-working facilities. India’s growing high-net-worth population — individuals with investable assets exceeding $1 million — has expanded to over 4 lakh families, creating a deep demand pool for premium properties.

Non-resident Indian (NRI) buyers are also active, taking advantage of a weaker rupee that makes Indian real estate relatively affordable when purchased with dollar, dirham, or pound earnings. Developers report that NRI inquiries have increased 35 per cent year-on-year, with Dubai-based and US-based Indians the most active buyer segments.

Affordable Housing: The Forgotten Segment

In sharp contrast, affordable housing sales have declined for the third consecutive year in relative terms. Homes priced below Rs 45 lakh now account for less than 20 per cent of total metropolitan sales, down from over 40 per cent in 2019. Developers cite rising land costs, construction material inflation, and regulatory compliance expenses as factors making affordable housing economically unviable in major cities.

The affordable segment’s difficulties are a policy concern. India’s urban housing shortage is estimated at 10-12 million units, overwhelmingly concentrated in the lower income brackets. The Pradhan Mantri Awas Yojana (PMAY) urban component has achieved significant success in subsidising home purchases, but the scheme’s credit-linked subsidy structure works best when developers are building affordable units — and fewer are doing so.

Several state governments have responded with targeted interventions. Maharashtra has introduced additional floor space index (FSI) incentives for affordable housing projects, while Karnataka has reduced stamp duty on properties below Rs 35 lakh. Whether these measures are sufficient to reverse the segment’s decline remains to be seen.

Commercial Real Estate: Office Demand Defies Work-From-Home Predictions

India’s commercial real estate market continues to defy predictions that remote work would permanently reduce office demand. Gross office leasing across the top six cities reached 64 million square feet in calendar year 2025, and Q1 2026 data suggests a further 8 per cent annual increase. Global capability centres (GCCs) — offshore operations of multinational companies — account for over 40 per cent of new leasing.

Bengaluru remains India’s largest office market, followed by Hyderabad and Mumbai. The growth of GCCs has been particularly transformative for Hyderabad’s HITECH City and Bengaluru’s Outer Ring Road corridors, where vacancy rates have dropped below 5 per cent and rental growth exceeds 10 per cent annually.

The investment opportunities in Indian markets extend well beyond residential property, with commercial real estate investment trusts (REITs) — Embassy Office Parks and Mindspace Business Parks — delivering steady yields to retail investors.

RERA’s Impact: A Decade of Transformation

The Real Estate Regulation and Development Act (RERA), which came into force in 2016, has completed a decade of operation. Its impact on the industry has been profound. Project delays, once endemic in Indian real estate, have decreased significantly. The proportion of projects delivered on time has risen from approximately 30 per cent pre-RERA to over 70 per cent in RERA-compliant states.

Buyer confidence has increased as a result. The transparency requirements — escrow accounts for construction funds, mandatory project registration, and penalties for delays — have shifted the power balance toward consumers. Smaller, undercapitalised developers who relied on buyer advances to fund construction have been squeezed out, with market share consolidating among larger, better-capitalised firms.

However, RERA implementation remains uneven across states. Maharashtra and Karnataka have robust regulatory machinery, while several other states have been slow to establish fully functional RERA authorities. The central government has urged lagging states to strengthen implementation, recognising that national housing policy depends on consistent state-level execution.

Interest Rates and Housing Finance

Home loan interest rates in the 8.5-9.0 per cent range have become the new normal after the RBI’s rate hiking cycle of 2022-24. While rates are higher than the ultra-low levels of 2020-21, they remain historically moderate and have not significantly dampened demand in the premium segment where buyers tend to be less rate-sensitive. The digital finance revolution has also streamlined mortgage processing, with approval times at major banks reducing from weeks to days.

For the affordable segment, however, even small interest rate differences materially affect EMI affordability. A 50 basis point reduction in rates would make approximately 8 million additional households eligible for home loans under standard affordability criteria. This is one reason why rate cut expectations remain central to the affordable housing recovery story.

India’s real estate market in 2026 is healthy by most conventional metrics — sales volumes, price growth, construction activity, and commercial leasing are all strong. The challenge is ensuring that this prosperity extends beyond the premium segments to address the housing needs of India’s aspirational middle class. Until affordable housing becomes commercially viable again, the market’s record numbers will tell only half the story.

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