Private institutional investors are increasingly favouring luxury and premium housing over affordable homes in India, with the high-end segment accounting for 56% of institutional investments in residential real estate between 2011 and September 2026, according to a report by real estate consultancy Vestian.
The report, titled Indian Real Estate: Key Trends Transforming the Investment Landscape, found that affordable and mid-income housing accounted for the remaining 44% of institutional residential investments during the period. The shift comes even as the government continues to support affordable housing through policy measures and dedicated funding initiatives.
The share of affordable housing in new residential launches has fallen to less than 10% in the first half of 2026, compared with more than 50% in the pre-COVID years. In contrast, luxury and premium housing accounted for more than 60% of total residential launches in 2025, up from around 20% in 2017.
According to Vestian, rising construction costs, changing buyer preferences and increasing demand for larger, higher-quality homes have encouraged investors to focus on premium residential projects. The segment has also attracted institutional capital because of its profitability and potential for capital appreciation and rental income.
The report stated, “For over a decade, the government promoted affordable and mid-income housing by providing incentives to developers and homeowners, whereas luxury/premium segment emerged as the preferred investment choice for investors due to better profitability.”
It further noted that high-end real estate has become a preferred investment asset class because of its potential for stable capital appreciation, inflation protection and relatively higher rental yields.
SWAMIH Supports Affordable and Mid-Income Housing
While private institutional capital is increasingly flowing into premium housing, government-backed financing continues to play a significant role in supporting affordable and mid-income residential projects.
Vestian found that the Special Window for Affordable and Mid-Income Housing (SWAMIH) funds accounted for nearly half of the investments received by the affordable and mid-income housing segments between 2019 and September 2026.
Launched in November 2019, SWAMIH Fund-I was established to provide last-mile financing to stalled affordable and mid-income housing projects registered under the Real Estate Regulatory Authority (RERA).
The fund has supported the completion of more than 58,596 homes across 146 projects, according to the report. SWAMIH Fund-II is currently being rolled out to continue supporting the segment.
Investment Divide Between Premium and Affordable Housing
The report highlighted a growing divergence between government housing priorities and private investment decisions. While policy initiatives continue to support affordable and mid-income housing, private institutional investors are increasingly directing capital towards premium residential developments.
“This divergence is likely to remain a defining feature of India’s residential investment landscape, with policy-led capital supporting affordability and private institutional capital increasingly favouring the premium end of the market,” the report stated.
Vestian expects large private investors to continue driving investments in luxury and premium housing, while government-backed initiatives such as SWAMIH remain important sources of funding for affordable and mid-income projects amid rising construction costs.
