Real estate developers in India have been embracing the idea of plotted developments with gusto. This has prompted investors and buyers to put their money into plotted developments throughout the country because they are less expensive to maintain and can be modified easily whenever necessary while still providing long-term financial stability.
The Covid-19 pandemic has reshaped India's second-home market in a big way. Hill station homes have emerged as top choices for getaways or second homes for high-net-worth individuals (HNIs) and urban professionals. Once considered seasonal getaways, these properties have transformed into year-round residences, largely driven by changing lifestyle preferences, digital connectivity, and enhanced physical infrastructure.
Institutional investment in Indian real estate rose 51 per cent to a record USD 8.87 billion during 2024 as investors look to encash strong demand for housing, office and warehousing properties, according to JLL. In its report released on Wednesday, real estate consultant JLL India has estimated the institutional investment in Indian real estate at USD 8.878 billion in 2024 compared to USD 5.878 billion in the preceding calendar year.
Millennials (those born between 1981 and 1996) are gravitating towards home ownership, while Gen X and elders (born between 1965 and 1980 and earlier) are considering larger homes.
The weighted average price of newly launched projects in the top 30 Tier-II cities surged by up to 65 per cent between December 2023 and October 2024, according to a recent report by PropEquity. Before investing, one must understand the nuances of this emerging sub-asset class.
Key drivers: Employment, infra growth
The appeal of India’s Tier 2 and Tier 3 cities is significantly influencing the real estate sector, spanning from tranquil areas to thriving urban centers. Factors such as a burgeoning population, swift urbanization, and enhanced infrastructure are drawing not only new residents but also developers keen to explore the vast opportunities these cities present.
Peripheral regions across India's major cities are witnessing exceptional residential price growth, outpacing many established prime locations over the past six years, reveals the latest ANAROCK research. For example, Bengaluru's Gunjur recorded a remarkable 69% increase, with prices increasing from INR 5,030 per sq. ft. in 2019 to INR 8,500 per sq. ft. in Q3 2024. Meanwhile, Thannisandra Main Road, a prime area, saw comparatively lower growth at 62%, rising from INR 5,175 per sq. ft. to INR 8,400 per sq. ft. during the same period.
The Indian real estate market continues to demonstrate resilience and adaptability. A supportive regulatory environment and recent regulatory push such as SM-REITs (Small & Medium REITs) and refinement of state-specific RERA (Real Estate Regulation & Development Authority Act) regulations have enhanced transparency and institutionalization in the real estate sector. Policy frameworks have also driven a sense of fair pricing across real estate segments, attracting both developers and investors.
India’s office real estate market has witnessed a historic surge in demand, with 58 million square feet (msf) of office space leased in the first three quarters of 2024 — the highest demand ever recorded for this period. This figure has already surpassed the total demand for the entire year of 2018, setting a new benchmark for the industry, according to a report by real estate consultancy firm CRE Matrix.
2025 is likely to witness healthy traction in luxury and ultra-luxury apartments and condos, driven by strong appetite from high net worth individuals (HNIs) and non-resident Indians (NRIs). A clear preference for premium and best-in-class offerings will increasingly define the contours of the segment. Enquiries and primary sales in plotted developments, villas within gated communities and vacation homes are likely to be strong throughout 2025 and beyond, said a report by Colliers India, a real estate consultancy firm.
