As part of the holy trinity of “roti, kapda and makaan” (food, clothes and shelter), home ownership has been an integral part of Indian society and one of the biggest investments in an individual’s life. The year 2025 is likely to witness an increase in property purchases with the rapid appreciation in prices in the rental market which is even outpacing capital growth in multiple regions.
As per a report by MagicBricks, rental rates have surged 10-50% higher than capital appreciation in key markets and is leading to an inclination towards home ownership over rentals. This assumes significance as only 69% of households in urban India own a house according to Census 2011, and the increase in rental values along with expected rise in property values on account of high demand and low supply is expected to further spur demand for home ownership among households in 2025.
This bodes well for the residential real estate sector where rental demand dipped by 22.7% in the October-December quarter of 2024 across India and rental affordability is becoming a growing concern, making a market shift imminent and homeownership now emerging as a more cost-effective alternative. MagicBricks suggests that cities like Greater Noida(-36.3%QoQ), Delhi (-33.4%QoQ), Noida(-33.2% QoQ), Bengaluru (-15.6% QoQ) and Hyderabad (-19.9% QoQ) witnessed significant drops, suggesting that high rental costs may be driving tenants toward homeownership.
With rentals touching new highs and affordability becoming a real concern for tenants, 2025 is poised to be a year of decisive action for many aspiring homeowners. We’re already witnessing a growing sentiment shift where homebuyers are choosing to invest rather than rent—particularly in well-connected micro-markets that offer strong infrastructure and lifestyle value. This demand surge is also prompting developers to offer smarter, more value-driven propositions, making homeownership not just aspirational, but attainable,” says Bhavesh Kothari, Founder and CEO, Property First.
Developers increase supply to tap into pent up demand
The heightened inflation in property rental prices on account of inflation, market demand, operating costs and macronic economic forces is driving up the demand for residential properties, leading developers to increase supply. This trend is significantly visible in the luxury housing segment where the supply rose by 10% to 56,014 units in 2024 as per global property consultant Knight Frank. Interestingly, the highest growth in sales of luxury residential units in Bengaluru was witnessed in the ticket size of ₹2-5 crore which posted an annual growth of 91% year-on-year to 9,584 units during 2024 from 5,014 units in 2023.
This further assumes significance as the project completion time in the top seven cities has reduced to 4.9 years, from 6.1 years in the 2010-2019 period. Anarock reports that the average completion time was lowest in Chennai with 3.6 years, while Hyderabad and Bangalore clocked in at 4.2 and 4.8 years respectively, for all large projects launched and completed between 2014 and H1 2024. Similarly, large projects launched and completed between 2014 to H1 2024 in Kolkata took the longest average time to complete, at 5.7 years while Mumbai Metropolitan Region (MMR) registered an average of 4.7 years and around 5.2 years for large projects.
Pune posted 4.3 years for small projects and 5.4 years for large ones while homebuyers in NCR waited an average of 4.7 years for small projects and 5.4 years for large ones.
This was realised on account of growing preference of homebuyers towards established developers, stringent rules such as Real Estate Regulatory Authority (RERA) Act and extensive use of technology in project construction, helping complete projects on or before stipulated time.
Micro-markets lead supply of new residential units
The Indian real estate sector is witnessing the rise of new economic hubs in the form of micro markets which are attracting the interest of developers, occupiers, homebuyers and investors. From Dombivali, Thane and Panvel West in Mumbai Metropolitan Region, Sarjapur and Whitefield in Bengaluru,Greater Faridabad, New Gurugram and Dwarka Expressway in Delhi-NCR, Madhapur, Gachibowli, in Hyderabad and Hinjewadi, Wakad and Wagholi in Pune, micro-markets have become the new choice for homebuyers.
This shift is on account of infrastructure projects such as flyovers, metros etc., improving connectivity to key centres, relatively affordable land rates in comparison to central and secondary business districts which is leading to the development of commercial, residential and retail real estate. This apart, the presence of social infrastructure such as hospitals, schools and multiplexes have improved the quality of life in these regions, attracting stakeholders across the spectrum. Homebuyers are attracted by the ecosystem of a CBD or SBD area which are available at an affordable cost, driving them towards investing in a residential project to benefit from the property’s rapid value appreciation.
This year, the industry is likely to witness a robust growth in sales across the top cities in the anticipation of a further increase in property prices and high fluctuations in rents due to market forces. Therefore, developers are launching projects across price points and various micro markets to cater to homebuyers’ nuanced requirements with flexible payment options and unique project mixes. They are also attracting homebuyers with additional benefits such as ‘1% payment now’ to fully furnished homes and modular kitchens to free parking spaces for their projects in micro markets.
(Brand Connect Initiative)
Source Homevior.in
