Indian Real Estate Market 2025: Tier-2 Cities Pull Ahead, Luxury Soars, Affordable Housing Sale Decline

India’s housing market is in the middle of a recalibration. The latest numbers from Grant Thornton Bharat’s FY2025-26 real estate report don’t paint a single story; they show a market diverging, with different forces pulling in different directions, as per India Real Estate Report FY 2025-26: Trends, Insights & Forecasts Report by Grant Thornton Bharat.

Take affordable housing. Often pitched as the lifeline for India’s middle class, this segment saw a 9 per cent drop in sales in the first quarter of FY2025. On paper, that’s not a great start. But a 19 per cent fall in unsold inventory in the same period tells another story: buyers haven’t disappeared. They’re just not biting into new stock at the same pace, and developers are holding back launches. This isn’t collapse; it’s correction.

Luxury Houses Priced Over Rs 1 Crore Are In Demand

At the other end of the spectrum, luxury housing is on a tear. Homes priced north of Rs 1 crore were flying off the shelves. It’s not just about wealth; it’s about what wealth wants now. Post-pandemic, the buyer mindset shifted. Bigger spaces, premium finishes, privacy, and wellness-first amenities have moved from ‘nice to have’ to non-negotiable. 

For their part, developers are serving up curated, experience-rich homes aimed at a discerning crowd willing to spend.

Property Demand Rise In Jaipur, Bhubaneswar, Nagpur, Visakhapatnam

Meanwhile, Tier-2 cities are quietly outpacing metros in momentum. Jaipur, Bhubaneswar, Nagpur, Visakhapatnam these names are starting to crop up in investment memos and homebuyer shortlists alike. They’re benefitting from infrastructure push, rising employment hubs, and a cost of living that still makes financial sense. For investors looking for growth without metro saturation, this is where the action is moving.

Other Investment Avenues in Real Estate Apart From Physical Property

Investments are also getting smarter. Real Estate Investment Trusts (REITs) now account for over 9 per cent of total office stock in the top eight cities. It’s no longer just about buying flats; institutional investors are betting on income-generating commercial assets. And the game is opening up. Small and Medium REITs (SM REITs) and real estate tokenisation are creating new ways for retail investors. Fractional ownership is no longer a buzzword; it’s becoming an entry point.

Even rentals, long the neglected cousin of buying, are getting structured. Co-living spaces, formal rental housing, and frameworks like the Model Tenancy Act are giving the rental market a much-needed spine. For tenants, this means clarity and rights. For landlords and developers, it’s stability and scale.