by Manoj Agarwal, Chairman and Managing Director, Great Value Realty
Real estate investment continues to be a cornerstone of financial security and wealth creation in India. For decades, owning property has been considered a vital step toward stability, prosperity, and even social status. As one of the fastest-growing economies in the world, India’s real estate sector plays a pivotal role in shaping urban landscapes, creating jobs, and driving economic growth. However, as customer preferences change, so do the dynamics of the real estate market.
The real estate sector in India is gearing up for a huge transformation in 2025. While traditional values like investment potential and location remain key, new trends ranging from sustainable living to modern design and integrated technological solutions are redefining what buyers seek. Developers are responding to these changes by adopting innovative approaches to meet emerging demands, ensuring that investment in real estate remains as significant as ever, albeit with a modern twist. Let’s discuss how consumer preferences are changing the future of real estate in India.
Reverse migration to suburban and rural areas
A significant demographic shift is reshaping residential real estate dynamics, with a pronounced migration trend from urban centers to suburban and rural areas. This movement is driven by homebuyers' increasing preference for larger living spaces and enhanced quality of life. Tier II and III cities are emerging as crucial growth centers, with locations like Jaipur, Indore, and Kochi projected to account for over 40% of new housing developments. This transformation is supported by robust infrastructure development, competitive land prices, and strategic government initiatives such as the Smart Cities Mission. Urban migration patterns suggest a 15% population growth in smaller cities by 2030, bolstered by major infrastructure projects like Bharatmala and Gati Shakti.
Surge in demand for office spaces
In recent years, tech-centric cities like Bengaluru, Hyderabad, and Pune have witnessed a trend where businesses are shifting from traditional office setups to more flexible workspaces. The increasing popularity of hybrid work culture has given rise to flexible office solutions, such as coworking spaces. The commercial segment has shown exceptional performance in 2024, with Grade A absorption surpassing 60 million sq-ft for the first time in the country's history. Bengaluru and Hyderabad have emerged as dominant markets, collectively driving approximately half of all leasing activity. While traditional tech sector demand has stabilized, it continues to account for a quarter of overall leasing. These factors will continue to drive the sector in the coming years, too.
Luxury is the new norm
The luxury housing segment is experiencing unprecedented growth, driven by strong demand from High-Net-Worth Individuals (HNIs) and Non-Resident Indians (NRIs). Premium properties, particularly plotted developments and gated communities, are anticipated to maintain strong momentum throughout 2025 and beyond. This trend aligns with broader market evolution. India's burgeoning middle class, with projections indicating that 50 million households will have annual incomes exceeding INR 30 lakh by 2025, drives demand for mid-income and premium housing segments. The urban homeownership rate is expected to reach 72% by 2025, up from 65% in 2020, supported by accessible financing options and increasing participation from younger demographics. Moreover, millennials and Gen Z buyers are expected to comprise 60% of new homebuyers by 2030.
Sustainability has taken the center stage
Sustainability has transitioned from a luxury consideration to a fundamental market requirement. Green-certified buildings are projected to constitute 30% of new residential projects by 2025, doubling from 15% in 2020. This surge is driven by increasing environmental consciousness among buyers and substantial government incentives for eco-friendly construction. According to the National Housing Survey 2024, 30% of homebuyers in the INR 50- INR 90 lakh range prioritize energy-efficient homes which reflects their preference for sustainability in purchase decisions. Developers are increasingly incorporating features such as solar panels, rainwater harvesting systems, and smart waste management solutions. According to the Indian Green Building Council, green-certified homes can achieve annual energy cost reductions of up to 25%, making them particularly attractive to environmentally conscious buyers and investors.
Technology reigns supreme
Technology integration is revolutionizing the real estate sector through PropTech solutions, with the segment projected to reach $25 billion by 2025, representing 8% of the real estate market. This marks substantial growth from less than 5% in 2023. Artificial Intelligence-driven platforms are transforming property searches, with 70% of urban homebuyers utilizing AI tools for decision-making in 2024. Blockchain technology is enhancing transparency and security in property transactions, while virtual reality is streamlining the home-buying experience. It's projected that 50% of property transactions in Tier I cities will leverage VR technology by 2025.
End words
The convergence of technology, sustainability, and evolving consumer preferences signals a new era in property development and investment. The sector is projected to contribute 13% to the national GDP, which indicates its critical role in India's economic landscape. The shift toward suburban living, the increasing demand for green buildings, and the integration of cutting-edge PropTech solutions reflect a mature market responding to changing societal needs. With Tier II and III cities emerging as new growth engines, luxury housing gaining momentum, and office spaces adapting to hybrid work models, the real estate sector is poised to surpass the $1-trillion mark by 2030. These trends in the sector represent a fundamental reimagining of how Indians live, work, and interact with their environment.