India's Real Estate Sector to Enter Consolidation Phase: Premium Housing Demand Remains Strong
India’s real estate sector is expected to enter a consolidation phase with moderate growth, while premium housing demand remains strong and affordable supply continues to shrink, says India Ratings.
In an interaction with ETRealty, Mahavir Jain, director at India Ratings & Research, stated that the sector has witnessed 20–25% growth in volumes and prices over the past two years, creating a high base. Going forward, the market is likely to see consolidation, with growth expected in the range of 5–6% and no significant correction anticipated.
Jain noted that the premium housing segment, particularly in the ₹2–5 crore range, is expected to remain resilient and continue to drive demand over the medium term. In contrast, the affordable housing segment is facing supply constraints due to rising land prices and limited viability for private developers.
Homes priced below ₹1 crore are increasingly becoming difficult to develop within city limits and are likely to be driven by government-led or public-private partnership projects, particularly in peripheral locations.
On developer expansion, Jain observed that leading real estate companies are entering new geographies in a calibrated manner, aiming to build a pan-India presence while managing risks associated with regulatory and market differences across states. He added that strong regional developers are likely to remain competitive due to their local market understanding and brand recall.
In the commercial real estate segment, Jain highlighted that global capability centres (GCCs) continue to be a key demand driver, supporting leasing growth. While global uncertainties and technological shifts such as AI pose evolving risks, limited supply in the near term is expected to keep demand-supply dynamics favourable for developers.
Flexible workspace operators are playing an increasingly important role by offering plug-and-play solutions and enabling companies to scale operations efficiently.
On the regulatory front, Jain said reforms such as RERA have improved transparency and accountability in the sector, leading to an upgrade in overall credit quality. He added that credit ratings have become an important tool for stakeholders to assess developers’ financial strength, liquidity, and ability to service debt.
