Buyer preferences are reshaping India’s residential markets

India’s residential market is experiencing a surge in demand for premium housing amidst the country’s sharpest recovery post pandemic as it expands into newer markets.

April 21, 2023

India’s residential market has witnessed staggering growth in the past few years, especially with the dwindling impact of the pandemic, which started in early 2020. Record-breaking launches and sales were achieved in 2022, along with healthy growth in home prices.

However, in the past two years, there has been a significant rise in demand for premium housing across the country, despite economic headwinds, both on the global and domestic fronts. Amid the sharp recovery in residential real estate post-pandemic, interest in upper-mid, premium and luxury segments peaked across the country. The share of sales and new launches pertaining to these three segments has grown over the past two years, showing a notable jump compared to pre-pandemic years.

Residential launches and sales were categorised based on the following criteria across cities:

Table 1: Definition of price segments across cities

Category Mumbai Other cities
Affordable & Mid Up to INR 20 million Up to INR 10 million
Upper mid INR 20 - 30 million INR 10 - 20 million
Premium INR 30 - 50 million INR 20 - 30 million
Luxury >INR 50 million >INR 30 million

Source: JLL Research

Figure 1: Classification of new launches across segments

Source: JLL Research, 4Q22

Figure 2: Classification of sales across segments

Source: JLL Research, 4Q22

While the share of upper-mid, premium and luxury segments in new launches remained at ~20% before COVID, it increased to 27% in 2021 and grew further to 36% in 2022. Similarly, the sales share of these three segments jumped from ~15% before COVID to 20% in 2021 and spiked further to 25% in 2022. Albeit the sudden spike in premium housing demand, affordable and mid-segment housing continued to maintain robust traction in India’s residential market, given the renewed interest in owning a home from buyers across all income categories in the country.

Figure 3: Distribution of launches of upper-mid, premium and luxury segments across cities

Source: JLL Research, 4Q22

Traditionally, the premium housing market in India has been concentrated in prime markets such as Mumbai and Delhi. However, the surge in demand after the pandemic has given rise to new hotspots for this segment in cities such as Hyderabad and Pune, which are largely driven by the IT, Pharma and Automobile sectors. The combined share of Hyderabad and Pune in the premium housing market has grown massively, from ~20% before COVID to 39% in 2021 and 57% in 2022.

The sustained demand in the premium housing market is largely attributed to growing affluence levels in major metropolitan cities. Demand for affordable and mid-level housing in the top Indian cities is being replaced by demand for the upper-mid segment and luxury housing, as nuclear families with higher disposable incomes look for properties with premium amenities and larger built areas in well-developed locations. While the resurgence in these segments has largely taken place in the usual central sub-markets in Pune, new localities have appeared in Hyderabad, driven especially by demand in the upper-mid and premium segments.

India’s premium housing market has recorded strong traction over the past two years, largely driven by the upper-mid and premium segments. This trend is expected to continue in 2023, owing to sustained demand. Luxury real estate has emerged as a preferred choice for NRIs and HNIs in the past couple of years, and it continues to be so.