2024 has been one of the best years for the residential real estate sector, with pre-sales worth Rs 5.1 lakh crore expected to be generated by the end of the year across the top seven cities, according to a report from consulting firm JLL.
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However, analysts have noted that despite sky-high pre-sale amounts and a decent, 10-11 percent growth in home prices, the increase in square footage has been limited. This points to growth focused on high-end homes, while stress in affordable and mid-ticket homes is likely to persist into 2025, unless the Reserve Bank of India eases its monetary policy and inflation decreases.
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“Within residential real estate, demand for luxury and ultra-luxury segments will witness higher growth as compared to affordable and middle-income segments. Developers will continue to recalibrate their strategies and be selective in launching new projects,” said a Colliers report looking into the residential real estate segment for 2025. The report added that ready-to-move-in apartments and branded developers will be preferred by homebuyers next year, as has been the case, especially since the COVID-19 pandemic.
Premium and luxury real estate developers were the primary beneficiaries of real estate demand in 2024, with India’s most valuable listed developer, DLF, selling out units in projects such as the Privana West, launched earlier this year, within three days, amid strong demand from high networth individuals and non-resident Indians.
The pull of premium and luxury real estate brought developers out of their dominant markets and into other cities, with the Mumbai metropolitan area receiving significant interest from developers based in Delhi NCR and Bengaluru. On the flip side, Mumbai-based developers are targeting significant business opportunities in Bengaluru and, to a lesser extent, Delhi NCR. These include Birla Estates, Macrotech Developers, and Tribeca Developers, the last of which is planning several Trump Tower launches across Indian markets in 2025.
Venturing out
After earlier unsuccessful attempts to enter, DLF has renewed its focus on Mumbai with an upcoming premium-luxury project in Andheri. Meanwhile, Bengaluru-based developers Prestige Estates, Sobha, and Puravankara have detailed significant business and revenue plans for Mumbai and its metropolitan area, with some projects set to be delivered starting in 2025.
“Looking ahead to 2025, we foresee continued demand for luxury and ultra-luxury homes, particularly from high-net-worth individuals and non-resident Indians. Sobha’s focus on delivering benchmark-quality homes through our backward-integrated approach will continue to anchor our strategy. Our diverse project portfolio, combined with our strategic entry into new markets such as Noida and Mumbai, reflects our commitment to growth and innovation,” said Sumeet Chunkhare, chief marketing and communications officer at Sobha Ltd.
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Affordable housing
At the lower end of the market, however, developers have noted a slowdown in sales, as interest rates remain higher than pandemic-era lows. Real estate observers also said relatively high inflation and under-par wage growth have forced some homebuyers to defer purchases, especially first-time homebuyers and those buying homes priced Rs 50 lakh or under.
“More land needs to be reachable through massive infrastructure development, so as to reduce land and home prices, and any homes priced Rs 45 lakh or under should attract minimal taxation, so that developers are incentivised to provide more homes. An effort should also be made towards promoting more townships with more amenities,” said Abhishek Kiran Gupta, co-founder and CEO of IndexTap.
