Real Estate Sees Renewed Momentum, Demand for Luxury Homes Set to Surge by 2026

New Delhi, July 5, 2025: The COVID-19 pandemic has significantly altered perspectives on housing. A home is no longer just about four walls—it’s about space, comfort and access to lifestyle amenities under one roof. This shift in mindset has led to an unprecedented rise in the demand for premium and luxury homes.

According to a recent report by CRISIL Ratings, residential sales are expected to grow steadily at 10–12 per cent in FY2025 and FY2026. Volume-wise, the demand could rise by 5–7 per cent while average prices may increase by 4–6 per cent.

Historic Growth in Premium and Luxury Segment

The report highlights a major shift in consumer preferences post-pandemic. Buyers are increasingly opting for larger, premium homes. While luxury housing launches accounted for just 9 per cent in 2020, this figure surged to 37 per cent by 2024. CRISIL forecasts this share to rise further to 38–40 per cent in FY2025–26.

Experts believe rising lifestyle awareness among high-income consumers is driving this trend. There is a growing preference for smart home features, high-end amenities, and prime locations.

Decline in Affordable and Mid-Segment Supply

While the premium segment gains momentum, the share of affordable and mid-income housing is shrinking. The report predicts affordable housing launches to decline to 10–12 per cent and mid-segment to 19–20 per cent in 2025–26, compared to 30 per cent and 40 per cent, respectively, in 2020. High land prices and rising construction costs have made these segments less attractive for developers.

Inventory Levels Rise Slightly

Due to robust demand over the past three years, developers have increased their project launches. As a result, supply has slightly outpaced demand. The report estimates inventory levels to rise to 2.9–3.1 years, compared to 2.7–2.9 years previously.

Stronger Balance Sheets Through Deleveraging

With better sales performance, timely project deliveries and joint development models, developers have improved their financial health. Equity flow through qualified institutional placement has reached 24 per cent, up from 13–16 per cent.

The loan-to-operating cash flow ratio has also improved—from 5.6x in 2020 to just 1.1–1.3x now, enhancing developers’ credit profiles.

What Developers Say

Sanjay Sharma, Director, SKA Group, says, “The pandemic changed how people view homeownership. Homes are now seen as a symbol of safety and lifestyle. Buyers prefer spacious layouts, open areas and high-end amenities. This trend will continue to grow in the next two years.”

Saurabh Saharan, Group MD, HCBS Developments, says, “Gurugram and Dwarka Expressway are no longer just homebuying locations—they are smart investment zones. People want luxury homes that offer strong returns while enhancing their lifestyle and status.”

Kushagr Ansal, Director, Ansal Housing, says, “Post-COVID, buyers seek a complete lifestyle experience. Features like health clubs, yoga zones, co-working spaces and community areas are now essential in luxury projects. Buyers are moving away from older apartments to modern communities.”

Manit Sethi, Director, Excentia Infra, says, “People want homes that integrate work, relaxation and entertainment under one roof. This trend is no longer limited to metro cities—tier-2 cities like Dehradun are also seeing a shift towards luxury homes. Smart tech, premium fittings and sustainable designs are redefining the segment.”

Neeraj Sharma, MD, Escon Infra Realtors, says, “Young professionals are willing to pay a premium for luxury features. Smart homes, private terraces and advanced security are becoming necessities. We are planning several new luxury launches to meet this demand.”

Sanjeev Arora, Director, 360 Realtors, says, “Technology is reshaping luxury living. Today’s buyers prioritise smart features like home automation, app-based maintenance and green certifications. AI, voice command systems and energy-efficient solutions will soon become the new normal.”