According to a recent Crisil Ratings report covered by ET Realty, India’s residential real estate is projected to grow at an impressive 10–12% CAGR over FY 26–27 in terms of sales value. This growth surge is primarily driven by increasing demand for premium and luxury housing, signaling a decisive shift toward high-value living in key urban markets. Here's a detailed breakdown of what it means for buyers, investors, and the future of India's housing story in mid-2025.
1. Market Outlook & Growth Drivers
Crisil's projections reveal:
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Sales value to grow 10–12% annually through FY 27
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Volume growth of 5–7% as more units sell
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Price appreciation of 4–6% annually, supported by premium segments.
This follows a period during which residential real estate delivered a 26% CAGR from FY 20–23 - fuelled by pandemic recovery and infrastructure expansion. The coming years aim to sustain this momentum, with premium real estate at the core.
2. Premiumization: The New Growth Engine
Why is luxury housing leading the charge?
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Premium & luxury launches jumped from just 9% in 2020 to 37% in 2024, and could reach nearly 40% of total new supply in 2025–26.
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Rising incomes, urbanization, and wealth accumulation are driving demand for larger, better-quality homes with superior lifestyle amenities.
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Buyers now emphasize wellness, green living, and smart-home technology—reinforcing the premiumisation trend.
This premium tilt is expected to anchor long-term price growth and help stabilize the broader market.
3. Volume Shift: Luxury Gains, Mid-Affordable Slips
Crisil notes that while premium luxury homes are capturing market share, affordable and mid-segment launches are slowing due to rising land and construction costs.
Volume growth is moderate (5–7%), but value growth remains robust—driven by higher ticket sizes and customer preference for branded living. This structural change favors tier-1 developers with strong execution history.
4. Where Demand is Concentrated
Market appetite for premium homes is most visible in India’s Top 8 cities:
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Mumbai, Delhi-NCR, Bengaluru, Pune, Hyderabad, Chennai, Ahmedabad, Kolkata.
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Luxury homes (>₹2.5 crore) made up nearly 46% of sales in late 2024 - upswing of 29% YoY.
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NCR registered a 4% dip in volume - but premium-ticket growth continued unchecked .
This highlights a growing disparity: luxury housing thrives even when affordable supply lags.
5. What This Means for Buyers & Investors
A. Homebuyers
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Expect steady appreciation: 4–6% price gains predicted annually.
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Look for mid-premium & luxury options in resale-ready corridors.
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Consider amenity-rich, brand-backed developments for long-term value.
B. Investors
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Volume growth may moderate - but value growth provides liquidity.
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Focus on 2–5 crore+ homes in top-tier cities for capital appreciation.
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Rentals in premium segments yield 4 - 7% good hold potential.
C. Developers
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Strengthen luxury and brand-backed launches.
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Maintain financial discipline: Crisil notes strong collections and reduced debt.
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Adopt asset-light joint-venture models, enabling more efficient deployment.
6. Smart Strategies for 2025
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Choose ready-to-move mid-premium properties to benefit from price growth today.
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Prioritize locations with strong infra, metro, & expressway access.
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Vet developer credentials: RERA history, on-time delivery, and balance-sheet strength.
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Consider 2–3 crores mid-premium homes for balanced affordability and returns.
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Stay nimble - inventory levels are rising, but premium brand-backed projects stand out.
Final Take
India’s real estate market is entering a new growth phase - driven by premiumization and backed by robust economic fundamentals. While volume growth may moderate, value uplift from luxury housing is expected to thrive through FY 27.
At Property Gallery, we specialize in identifying brand-backed, infrastructure-ready premium properties - the ones positioned to ride this wave. Whether you're buying or investing, let’s help you secure assets with growth, resilience, and lifestyle value.