How Urban Infrastructure and Finance Transformed India's Real Estate Post-COVID
The COVID-19 pandemic has reshaped India's real estate market, driven by changes in lifestyle and urban infrastructure. Discover how Urban Infrastructure Finance Companies played a pivotal role in this transformation.
Urban InfrastructureReal EstateCovid19 ImpactSmart Urban PlanningNisus FinanceReal EstateMay 26, 2025
For years, India’s middle-income homeownership has been defined by compact and convenient apartments within densely packed buildings. Homeowners made these choices based on the apartments’ proximity to their workplaces, schools, colleges, and other amenities. In metropolitan cities like Pune and Mumbai, a 1 or 2BHK has been the standard for a typical urban middle-class homeowner.
As the COVID-19 pandemic hit, it acted as a reset button in terms of real estate. What started as a public health crisis soon evolved into a catalyst for one of the most catalytic shifts in homeowner preferences and sentiments in the country. It changed what “home” truly meant to us. As we defaulted to lockdowns, and social distancing forced us to stay at home, the same space started feeling smaller. Our homes turned into our workspace, school, and everything in between. Home is no more a place we come back to in order to relax; it has now become the epicenter of all aspects of our life.
According to the ANAROCK-FICCI Homeowner Sentiment Survey, 53% of homeowners expressed their discontent in their current home size. The key reason being unit sizes. 51% of the respondents stated they preferred 3BHKs over any other unit sizes. Even in Pune, traditionally a market for 2BHKs, the appetite for more space is growing rapidly. The data further indicates that average flat sizes in the top seven cities grew by 11% annually in 2023, from 1,175 sq ft in 2022 to 1,300 sq ft in 2023.
The shift wasn't due to size alone; it was about the quality of life. Now, with less pressure to live near office corridors, buyers turned their attention to the outskirts. Places like Navi Mumbai, Thane, and parts of Pune and Bengaluru’s periphery that had traditionally been overlooked in favor of more central addresses, became a focal point. The MagicBricks Tier-2 study highlights that many companies have expanded to smaller cities during the pandemic, making Tier-2’s “less congestion, lower costs” appealing. Demand for 3BHK apartments particularly rose in cities like Chennai, Hyderabad, Delhi-NCR, and Bengaluru. To make staying at home more bearable, Indians have now started wanting balconies as a priority, with around 75% of property seekers demanding the same. Moreover, there has been a shift towards premium housing options. The demand for homes priced between ₹90 lakh and ₹1.5 crore has increased, with 28% of respondents preferring this range in 2024, up from 18% in the pre-COVID period.
This is where the role of Urban Infrastructure Finance Companies quietly but powerfully started to matter more than ever. While the headlines were focused on shifting buyer preferences and booming digital property platforms, what enabled this decentralized housing demand to take root was the backbone of urban infrastructure—roads, water, power, sanitation, and public transport. Without upgraded physical infrastructure in peripheral areas, the aspiration for larger homes would have remained just that—an aspiration.
The urban infrastructure and real estate finance companies didn’t just fund construction; they helped build livable ecosystems. By channeling investments into suburban infrastructure, affordable housing projects, and smart urban planning, they effectively broadened the map of what could be considered “home.” Their role, often behind the scenes, has allowed developers to take on bolder projects in emerging micro-markets and has given buyers confidence to invest beyond city cores. In many ways, they’ve acted as silent partners in this post-COVID housing transition, underwriting the long-term viability of the real estate rebound.
At a macro level, the pandemic created a new normal—not only for lifestyle choices but also for the very fabric of urban development in India. Urban Infrastructure Finance Companies became a bridge between shifting consumer behavior and the physical transformation of cities. They’ve played a pivotal role in shaping the new real estate narrative—one that’s more decentralized, more inclusive, and arguably more sustainable.
As we continue to see growth in tier-2 cities and suburban corridors, it’s increasingly clear that this change is not just a temporary reaction to a crisis, but a long-term evolution. The future of Indian real estate will be shaped as much by the choices of homebuyers as by the invisible hands that build the roads, fund the housing, and make new urban dreams possible.
Frequently Asked Questions
How did the COVID-19 pandemic affect homeowner preferences in India?
The pandemic led to a significant shift in homeowner preferences, with a growing demand for larger homes with more space, including balconies and 3BHKs. Homeowners began to prioritize quality of life and the ability to work from home.
What role did Urban Infrastructure Finance Companies play in the real estate market post-COVID?
Urban Infrastructure Finance Companies played a crucial role by funding the development of suburban infrastructure, affordable housing projects, and smart urban planning. This helped enable the decentralized housing demand and made larger homes in peripheral areas a viable option.
What are the key changes in average flat sizes in major Indian cities?
Average flat sizes in the top seven cities grew by 11% annually in 2023, increasing from 1,175 sq ft in 2022 to 1,300 sq ft in 2023. This reflects the growing demand for larger living spaces.
How did the pandemic influence the growth of tier-2 cities and suburban areas?
The pandemic reduced the pressure to live in city cores, making tier-2 cities and suburban areas more appealing due to less congestion and lower costs. Many companies expanded to these areas, further boosting demand for housing.
What is the future outlook for India's real estate market?
The future of Indian real estate is expected to be more decentralized, inclusive, and sustainable. The changes driven by the pandemic, such as the shift towards larger homes and the growth of tier-2 cities, are likely to continue and evolve over time.
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