According to real estate experts, the housing market is likely to record a moderate sin- gle-digit price increase in 2025 compared to the double-digit growth of 21% witnessed last year.
However, with increased urbanization, higher income levels and the aspiration to own a house, there is a rising demand for housing in all metros and larger tier II cities. Additionally, a significant number of millennials are entering the market at a younger age. There is also considerable interest from NRIs and high-net-worth individuals, who are recognizing the potential of India’s real estate market. This has led to a boost in higher rentals through short-term stays like Airbnb and holiday rentals, with yields reaching
up to 6%.
One of the defining trends in 2024 was the rising emphasis on sustainability and smart infrastructure. Across both residential and commercial segments, there has been a surge in demand for eco-friendly designs that prioritize energy efficiency and minimize environmental impact. Buyers today are more discerning, valuing properties that offer green certifications, sustainable materials, and innovative amenities designed for long-term living. This shift has been driven not just by regulatory changes but by a broader societal commitment to responsible development.”
Another key transformation has been the way we work. The pandemic accelerated a shift towards hybrid work models, and this trend has continued to reshape commercial real estate. Co-working spaces and flexible office formats have become essential to meet the needs of businesses looking for agility and scalability. This shift has had a ripple effect across urban centers, driving demand for mixed-use developments that seamlessly integrate living, working, and leisure spaces. Cities like Mumbai, Bengaluru, and Gurugram have emerged as hubs for these dy- namic environments, reflecting a broader trend of urban regeneration and smart city iinitiatives.
As we step into 2025, the outlook for the real estate sector is one of cautious optimism. While global economic uncertainty persists, there are positive signals, including expectations of interest rate cuts and a renewed focus on infrastructure investments. At the same time, luxury real estate will continue to evolve, with a focus on bespoke experiences and state-of- the-art amenities tailored to the needs of an increasingly global clientele. However, it is the government’s continued push for affordable housing and urban renewal projects that will play a significant role in driving growth.
Technology will be a game-changer in 2025. The integration of AI, IoT, and data-driven insights into real estate planning and development will enhance efficiency and improve decision-making across the board. From smart buildings that optimize energy usage to digital platforms that streamline property transactions, innovation will be at the heart of the sector’s progress.
Given the weak urban demand seen in the year gone by, a lot of hope is being pinned on the Bud- get to help revive urban consumption so that India maintains its growth trajectory. Income tax cut must be the Budget’s top priority. Reduction in GST on both construction material and under-construction properties will help developers to reduce the price of homes. Additionally, land and labor reforms will nudge the private sector to invest in India and help create jobs. Raising the affordable housing limit to Rs 1 crore will help bring fence-sitters into the real estate market and drive demand in the sector.
What’s more, in 2025 the ongoing move towards hybrid working will continue to redefine India’s work culture and reshape its business landscape. 2024 witnessed a significant uptake in the adoption of flexible workspaces, driven by enterprises, startups, and organizations embracing remote-first strategies. The rising demand, particularly in smaller cities and towns, underscores a growing preference for cost-effective, adaptable solutions that boost efficiency and connectivity while providing companies access to a network of locations across India and globally. While large cities like Bengaluru, Hyderabad, Mumbai, Pune, NCR, Kolkata, and Chennai continue to lead in demand, while Tier 2 and Tier 3 cities are emerging as crucial contributors to this growth. This reflects the growing preference for flexible workspaces in regions outside of traditional hubs.
For developers and investors alike, staying ahead of new trends will be crucial in delivering value and maintaining a competitive edge. Ultimately, the success of real estate in 2025 will hinge on its ability to balance innovation with tradition, creating spaces that honor the past while embracing the future. Alongside, developers are increasingly focusing on Environmental, Social, and Governance (ESG) goals integrating sustainability into their operations.
Contributing around 7% to the nation’s gross domestic product (GDP) in 2024, India’s real estate sector is poised to grow to 13% in 2025 and 18% by 2047, aligning with India’s projected $26 trillion GDP by its centenary of independence. The market size is ex- pected to expand from $300 billion in 2024 to $1 tril- lion by 2030, ultimately reaching $4.8 trillion by 2047
(CREDAI-EY).
Indeed, with housing sales value rising by 16% in 2024, year 2025 holds the key to unlocking further potential. To propel the sector forward, developers, advocate for the collective industry idea of reducing taxes on housing & under-construction proper- ties, redefining affordable housing by revising price caps and reviving subsidies for first-time buyers that would bridge affordability gaps.
Additionally, increased investments in urban infrastructure would enhance property values and market opportunities. In addition, incentivizing green construction through tax benefits and easing FDI norms to attract global capital would further strengthen the sector.
The year 2025 holds immense significance for the real estate sector, a key driver of India’s economic growth, contributing nearly 6-7% to the GDP and employing millions. This year, the industry is optimistic about targeted reforms that address affordability and liquidity challenges. For instance, revising the home loan interest deduction limit can stimulate housing demand, particularly in the mid-income and affordable segments, where sales have declined by over 14% year-on-year in 2024.
Additionally, institutional funding in real estate, which hit a record $6.5 billion in 2024, reflects strong inves- tor confidence, but expanding liquidity measures will ensure timely project delivery. As the country transitions into 2025, policies enabling rental housing expansion and infrastructure growth will be pivotal in driving urbanization and fulfilling the ‘Housing for All’ vision.
Equally transformative would-be granting industry status to real estate, a move capable of invigorating over 200 allied sectors. Such recognition would foster job creation, enable skill development, and amplify economic activity, further solidifying the sector’s position as a cornerstone of India’s economy.
Undoubtedly, in the coming years, the real estate industry is poised to play a defining role in India’s journey toward ‘Viksit Bharat 2047.’ Strategic reforms, such as adjustments to GST input tax credit regulations, could reduce developers’ tax burdens, poten- tially stabilizing property prices and making housing more accessible.
In sync, broadening the definition of affordable housing to include properties priced up to Rs 1 crore would align with evolving market dynamics and strengthen the government’s vision of ‘housing-for-all.’ These reforms, if implemented, could unlock tremendous potential, propelling the sector toward sustainable growth while contributing significantly to the nation’s development goals.”
Speaking to the developers, one could see the pulsating enthusiasm for the future of the sector that has come a long way to being a tech savvy sector with enhanced operational efficiency, now percolating to the bottom of the pyramid of the industry. To complement the same, simplifying approval processes through single-window systems and facilitating access to affordable financing can enhance efficiency and enable the timely completion of projects.
Specifically in the luxury real estate segment, the elite of India today want to live the palatial lifestyle which redefines luxury living. This coming year of 2025 is witnessing robust demand for ultra-luxury residences by strong appetite from HNI’s, UHNI’s and NRI’s and this trajectory will continue solidifying the luxury segment in India’s real estate market.
On the other end, with consumer preferences for sus- tainable living, a focus on incentivizing green hous- ing and sustainable developments will encourage eco-conscious practices, ensuring India aligns with global sustainability benchmarks.
The sector’s resilience and adaptability makes it a key driver of India’s economic growth. With targeted support in the budget, real estate can elevate urban living standards, attract global investments, and set new benchmarks for innovation and sustainability. These measures will not only enhance the sector’s growth but also contribute significantly to India’s goal of becoming a $1 trillion real estate market by 2030.
In 2024, the sector showcased remarkable growth, looking at the ongoing development, government’s continued supportive measures will further strengthen the real estate industry. Increasing tax slabs, par- ticularly for individuals earning ?12-15 lakh annually, will enable more citizens to invest in homeownership. Additionally, revising tax regulations for developers and stabilizing raw material prices will help manage construction costs and maintain housing affordability. These initiatives will not only boost the real estate sector but also contribute to India’s broader economic and housing goals, fostering sustainable growth nationwide.
The office sector growth is expected to stay buoyant with supply to touch a billion sq.ft. by the end of the 2025 with record leasing activity led by GCCs and flex space operators. Looking ahead to 2025, hybrid working is expected to become deeply embedded in India’s business landscape and the vibrant start-up ecosystem will drive demand for agile, tech-en- abled office spaces. The flexible workspace market will likely expand its footprint in both metro and Tier II and III cities, reflecting the growing preference for flexible work models.
AIFs as a tool for wealth diversification have become a preferred choice for affluent individuals as is evident from the fact that real estate contributed the highest share of investment from AIFs at over Rs 75,400 crore in the first half of FY25 with participa- tion from both domestic and foreign investors.
Real estate focused AIFs have huge opportunity to tap the untapped potential of the vast real estate landscape in the country by opening up not only funding avenues for development but also wealth creation for investors. The Union government must endeavor to achieve parity in capital gains on listed and unlisted instruments so as to make it more attractive for both domestic and foreign investors. Also ‘gains from investment’ must be classified on similar lines across instruments so that AIFs too enjoy the benefit.
The Budget must focus on not just maintaining India’s growth momentum but also initiating reforms that will aid India’s attractiveness as an investment destination for both domestic and foreign compa- nies. Input tax credit on fit-outs, review of depreciation and amortization rates for assets on the back- drop of larger adoption or AI and incentivizing new technology sectors would fuel the office demand evenly across the country.
The real estate sector firmly believes that positive revisions in housing norms and government policies will not only boost homeownership, but also contribute significantly to India’s vision of becoming a $5 trillion economy by 2047. Additionally, new trends comprising integration of technology and innovation are expected to redefine cities and towns across India, driving the real estate as well as infrastructure sector forward.
As a matter of fact, the Indian real estate growth story despite challenges such as rising construction costs and affordability gaps, is being driven by urbanization, infrastructure development, evolving consumer preferences and increased institutional investments. Moreover, real estate in India is no longer confined to traditional asset classes; emerging segments such as data centres, co-living, and senior housing are reshaping the landscape.
REAL ESTATE TRENDS 2025
The Suburban Living - The shift from major urban centres like Delhi, Mumbai, and Bengaluru to quieter suburban areas is poised to accelerate in 2025, driven by remote work model, availabil- ity of affordable homes in tier-2 and tier-3 cities, and a better quality of life. Also, the suburban living is becoming more feasible with improved connectivity.
Luxury Homes: In metro cities, luxury homes are evolving into status symbols. Sales surged 37.8% Y-o-Y in the first nine months of 2024, with 12,625 units priced at Rs 4 crore or more sold, up from 9,160 last year. Year 2025 will see HNIs increas- ingly seeking homes that blend luxury with nature & high-end amenities.
Flexible Commercial Spaces: With the changing work and lifestyle patterns, office spaces in year 2025 are set to be defined by modular furniture, flexible layouts, and breakout areas. Wellness zones will gain prominence as companies priorities creating workspaces that reflect their brand, attract top talent & enhance productivity.
Rise Of Co-living: Meeting the needs of the new generation, that prioritizes convenience, community, and lifestyle over traditional homeownership, co-living spaces will thrive 2025 onwards. With the gig economy and remote work rising, developers are integrating smart technologies, flexible leases to meet millennials’ demand for experience-driven living.
Green Buildings: Real estate developers are increasingly focusing on green building that are projected to boost property values by up to 10%. As the construction industry contributes 22% of India’s CO2 emissions, adopting green methods will become even more vital in 2025, more so with the government’s incentives for sustainable construction further accelerating green building adoption.
Smart Cities: Year 2025 will take forward the government commitment to improve transportation networks that is poised to drive the demand for real estate in both metropolitan and suburban areas. The technology is set to an integral tool in the real estate and city infrastructure ecosystem, making the processes faster, more transparent,
and more efficient.
The Indian real estate growth story despite challenges is being driven by urbanization, infrastructure development and increased institutional investments. Moreover, real estate’s emerging segments such as data centres, co-living, and senior housing are reshaping the landscape.
India’s real estate sector is poised for significant growth, with projections indicating it will exceed $4.8 trillion by 2047, contributing 18% to the projected $26 trillion GDP, according to a joint report by EY and CREDAI.
As we step into 2025, the outlook for the real estate sector is one of cautious optimism. While global economic uncertainty persists, there are positive signals, including expectations of interest rate cuts and a renewed focus on infrastructure investments.
The recent data indicates a healthy pipeline of new supply by listed developers in 2025. As long as the Indian economy remains strong with no major impact of global headwinds, sales will remain healthy, and prices will continue to trend upward. Though, increasing land and input costs will prevail on developers to increase property prices.
Looking ahead to 2025, with a more stable global economy and favorable geopolitical conditions Indian real estate market is expected to show resilience and is expected to remain a key area of focus for investors and homeowners alike, though the expectations in terms of property appreciation should be realistic.
