Indian Real Estate Market 2025–26: Sales Volumes Decline, but Property Values Continue to Rise
Indian Real Estate Market Overview (2025)
The Indian real estate market in 2025 has entered a phase of consolidation. While overall residential sales volumes have declined compared to previous years, the total value of property transactions has continued to rise. This trend highlights a clear shift in buyer preference toward premium, well-located, and high-quality developments.
Affordability pressures, higher home loan interest rates, and cautious buyer sentiment have slowed mass housing demand. However, strong end-user demand in premium segments and limited supply in prime locations have supported price growth across major cities.
Luxury & Premium Housing Remain Resilient
Luxury and premium housing segments have emerged as the strongest performers in 2025. High-net-worth individuals, business owners, and NRI buyers continue to invest in larger homes offering better amenities, privacy, and lifestyle value.
Cities like Mumbai, Gurugram, Bengaluru, and Delhi NCR are witnessing consistent price appreciation in luxury projects. Buyers are prioritizing branded developers, gated communities, and infrastructure-linked locations.
Why Luxury Housing Is Growing
- Strong demand from HNI and NRI buyers
- Limited supply in prime city locations
- Preference for lifestyle upgrades
- Real estate as a long-term wealth asset
Challenges
- High entry cost
- Selective buyer base
Investment & Capital Flow in Indian Real Estate
Investor confidence in Indian real estate remains strong. In 2025, private equity investments reached approximately USD 6.7 billion, while total institutional investments crossed USD 10 billion. Commercial real estate, office assets, warehousing, and premium residential projects attracted the majority of capital.
Institutional investors view Indian real estate as a stable asset class with predictable cash flows, especially in office spaces backed by strong leasing demand and long-term tenants.
Investor Positives
- Consistent rental income from commercial assets
- Growing REIT participation
- Strong urban consumption demand
Risk Factors
- Interest rate sensitivity
- Global economic uncertainties
Regional Market Trends & City Performance
While luxury hubs continue to lead, some cities experienced short-term slowdowns in 2025. Pune, for example, recorded a decline in new home sales due to IT sector caution and global economic headwinds. However, end-user demand remains intact.
Mumbai Metropolitan Region continues to benefit from major infrastructure projects, Bengaluru remains strong in rental housing, and Pune offers a balanced mix of affordability and steady appreciation.
Real Estate Outlook for 2026
The outlook for 2026 is cautiously optimistic. Market experts expect a gradual recovery in sales volumes as affordability improves and interest rates stabilize. Mid-income housing is likely to become the next growth driver, supported by infrastructure expansion and job creation.
Developers are expected to focus on well-priced, value-driven projects, while institutional investment is likely to remain strong across commercial and residential assets.
| Market Segment | 2025 Trend | 2026 Outlook | Investor View |
|---|---|---|---|
| Luxury Housing | Strong Growth | Stable Appreciation | High Confidence |
| Mid-Income Housing | Moderate | High Growth Potential | Positive |
| Affordable Housing | Slow | Gradual Recovery | Selective |
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