India's Residential Real Estate Poised for 10-12% Annual Growth Through FY27
India's residential real estate sector is set for a steady growth trajectory, with sales value expected to rise 10-12% annually through FY27, driven by increasing demand for premium and luxury housing.
Indian Real EstateCrisil RatingsLuxury HousingPremium HomesReal Estate GrowthReal Estate NewsJul 03, 2025
Sales volumes are expected to rise 5-7% while average prices may see a moderate 4-6% appreciation, reflecting continued end-user demand, improved affordability through lower interest rates, and smoother project launches across key urban markets. This comes after three years of post-pandemic boom during which the sector clocked a compound annual growth rate (CAGR) of 26% in value terms.
The trend is underpinned by an increasing appetite for premium homes. Launches in the premium and luxury segments surged from 9% in 2020 to 37% in 2024, and are expected to rise further to 38–40% of total new launches in 2025 and 2026. In contrast, affordable and mid-segment housing launches are projected to decline significantly due to rising land and construction costs, making them less viable for developers.
“Urbanisation and rising incomes are fuelling demand for larger, more luxurious homes. The trend of premiumisation is expected to continue, anchoring steady price growth over the medium term,” said Gautam Shahi, director of the company.
Even as overall supply continues to outpace demand — pushing inventory levels slightly higher to 2.9–3.1 years — Crisil believes developer credit profiles remain strong, buoyed by healthy collections and reduced leverage. Asset-light models like joint ventures and joint development have further helped improve balance sheets.
“Developers’ ability to maintain disciplined leverage and keep inventory in check will be key to sustaining momentum in the coming years,” said Pranav Shandil, associate director of the company.
Frequently Asked Questions
What is the projected annual growth rate for India's residential real estate through FY27?
India's residential real estate sector is expected to grow at a rate of 10-12% annually through FY27.
What segments are driving the growth in the residential real estate market?
The growth is primarily driven by the rising demand for premium and luxury housing, with launches in these segments expected to rise to 38-40% of total new launches in 2025 and 2026.
How have sales volumes and average prices been affected?
Sales volumes are expected to rise 5-7%, and average prices are projected to appreciate moderately by 4-6%.
What factors are contributing to the demand for premium and luxury homes?
Urbanisation, rising incomes, and improved affordability through lower interest rates are key factors fuelling the demand for larger, more luxurious homes.
What measures are helping developers maintain strong credit profiles?
Healthy collections, reduced leverage, and asset-light models like joint ventures and joint development are helping developers maintain strong credit profiles.
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