The Indian real estate market is experiencing a growing gap between luxury and mid-income housing. While luxury properties see strong demand, mid-income housing is facing supply challenges and market saturation in key urban areas.
According to Knight Frank India’s Senior Executive Director, Gulam Zia, luxury real estate remains resilient despite fluctuations in equity markets. High-net-worth individuals continue to invest, particularly in Mumbai and Delhi, where transactions for properties valued at ₹100 crore and above are surging. Mumbai has emerged as a hotspot, with over 98,000 apartments sold in 2024. However, the ₹20-50 crore segment is witnessing inventory buildup, which may take over five years to clear.
Hyderabad and Bengaluru are also experiencing steady demand in the luxury segment, with inventory levels remaining manageable. In contrast, the mid-income housing market is struggling, particularly in the National Capital Region (NCR) and Gurugram. Oversupply in the ₹4-5 crore segment is leading to a plateau in demand, as noted by Ashiana Housing’s Director, Varun Gupta. Developers are shifting focus to the ₹2-3 crore range, which continues to witness strong absorption.
Affordable housing is seeing a sharp decline due to rising taxation and regulatory costs. Hiranandani Group Chairman Niranjan Hiranandani stated that government levies in Mumbai account for nearly 50% of a flat’s cost, making affordability a challenge. Additionally, there is a growing preference for larger homes, mirroring trends in the automobile industry.
Experts predict that the luxury real estate market will continue to perform well, but mid-income housing developers must manage inventory carefully. Real estate is cyclical, and oversupply could lead to downturns in the mid-income segment if not addressed. Developers must adopt a cautious approach to sustain market stability.
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