India's Skyrocketing Real Estate Prices: A Barrier to Business Competitiveness
India's real estate prices have surged, making it difficult for businesses to remain competitive. Top investor Alok Jain highlights the challenges and impact of these rising costs.
Real EstateHousing PricesBusiness CompetitivenessAffordable HousingIndiaReal EstateFeb 25, 2025
According to a joint report by CREDAI – Colliers - Liases Foras, the highest increase was seen in Delhi NCR, with a 31% YoY growth, followed by Bengaluru, which saw a 23% YoY rise during Q4 2024.
This trend of rising housing prices has been consistent for the past 16 quarters, starting from 2021.
Interestingly, the price appreciation is evident in all the eight major cities.
Badal Yagnik, Chief Executive Officer at Colliers India, stated that the average residential prices could potentially increase at similar levels in 2025 on an annual basis.
“The recent repo rate reduction along with government initiatives to fund stressed residential projects will provide a boost to the affordable housing segment.
Moving forward, with room for further reductions in benchmark lending rates, most cities are likely to witness traction in housing sales across categories,” Yagnik added.
After Delhi NCR and Bengaluru, the maximum price hike was seen in Ahmedabad (15%) and Pune (9%).
Chennai witnessed a 6% price hike, Mumbai Metropolitan Region (MMR) saw a 3% increase, Hyderabad experienced a 2% rise, and Kolkata had a minor increase of 1%.
Within Delhi NCR, Dwarka Expressway recorded the highest annual price rise at 58%, and Greater Noida also saw impressive growth of 52% YoY.
Prominent micro markets such as Periphery & Outer West in Bengaluru, and Baner & Nagar Road in Pune, saw significant traction in ready-to-move-in units.
Boman Irani, President of CREDAI National, stated that the sustained growth in housing prices underscores the strong confidence among homebuyers, driven by a preference for spacious living and lifestyle upgrades.
“While evolving preferences and lifestyle upgrades remain key motivators, cost pressures in construction and land acquisition are also significantly contributing to pricing trends.
As we look ahead, a potential reduction in interest rates could further boost affordability and drive even greater demand,” Irani added.
The CREDAI – Colliers - Liases Foras report also noted that the unsold inventory continued to decline for the fourth consecutive quarter and dropped 5% annually during Q4 2024, supported by healthy demand.
“At the end of December 2024, unsold inventory at the India level stood below 10 lakh housing units for the first time in the last two years.
MMR, with a share of 40%, continued to account for a majority of the unsold inventory.
Notably, Pune saw the highest annual drop in unsold inventory at 14%, closely followed by Hyderabad with a 13% decline,” the report stated.
Top investor Alok Jain highlighted the challenges posed by India's soaring real estate prices, stating that they are making businesses uncompetitive.
“The high real estate prices in India are a significant barrier for businesses, from factories to offices to shops.
It's becoming increasingly difficult to operate profitably, and this is pushing many to reconsider their investments in the country,” Jain said.
This sentiment is echoed by the recent closure of Zara’s Mumbai store, which cited high rental costs as a major factor.
As the real estate market continues to evolve, the balance between demand and supply, along with government policies, will play a crucial role in shaping the future of the sector.
The potential for further interest rate reductions and government support could help mitigate some of the pressures on both buyers and businesses, but the current trend highlights the need for a comprehensive strategy to ensure sustainable growth in the real estate market.
Frequently Asked Questions
What is the main reason for the increase in housing prices in India?
The main reasons for the increase in housing prices in India include evolving preferences for spacious living, lifestyle upgrades, and cost pressures in construction and land acquisition.
Which cities saw the highest increases in housing prices in Q4 2024?
Delhi NCR saw the highest increase with a 31% YoY growth, followed by Bengaluru with a 23% YoY rise.
How is the unsold inventory in the housing market performing?
The unsold inventory continued to decline for the fourth consecutive quarter and dropped 5% annually during Q4 2024, supported by healthy demand.
What factors are contributing to the sustainability of high housing prices?
Factors contributing to the sustainability of high housing prices include strong confidence among homebuyers, evolving preferences for spacious living, and cost pressures in construction and land acquisition.
How are high real estate prices affecting businesses in India?
High real estate prices are making businesses uncompetitive, from factories to offices to shops, and are pushing many to reconsider their investments in the country.
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