Mid and Affordable Real Estate Segments to Gain Traction in the Market
BofA Securities reports that the residential real estate sector is in its fifth year of an upcycle, driven by strong demand and moderate investor participation. While luxury housing initially led the growth, mid-segment and affordable housing are expected to contribute more significantly in the coming years.
Real EstateLuxury HousingMidsegment Real EstateAffordable HousingResidential SectorReal EstateJun 05, 2025
Despite significant past growth, developers can anticipate 10-15% booking growth in the coming years, supported by favorable pricing trends. The property sector, particularly the residential segment, is in a strong position due to the consistent demand and limited inventory buildup. The participation of investors in the demand has been relatively low, which has helped maintain affordability.
Pricing has increased, but it has not reached a level that makes housing unaffordable. This supportive pricing environment is expected to continue, driving growth for real estate companies over the next two to three years and potentially up to five to seven years.
Kunal Tayal emphasizes that the demand for good projects remains high, and the overall demand for the residential sector is expected to continue for the foreseeable future. While the luxury segment has seen significant growth, the trend is expected to become more balanced with contributions from mid-segment and affordable housing.
The luxury and super-premium segments have been the primary drivers of the upcycle in the past four to five years. Moving forward, these segments will continue to perform well, but the growth is expected to be more evenly distributed among luxury, mid-segment, and affordable housing. This shift will ensure a more sustainable and balanced market, benefiting a broader range of homebuyers and developers.
Frequently Asked Questions
What is driving the current upcycle in the residential real estate sector?
The current upcycle in the residential real estate sector is driven by strong demand exceeding supply and moderate investor participation. This has led to favorable pricing trends and a positive outlook for developers.
How has the luxury housing segment performed in the past few years?
The luxury housing segment has been a significant driver of growth in the past four to five years. However, it is expected to become more balanced with contributions from mid-segment and affordable housing in the future.
What is the expected growth rate for real estate bookings in the coming years?
Developers can anticipate a 10-15% booking growth in the coming years, supported by favorable pricing trends and consistent demand for good projects.
Why is the participation of investors in the demand relatively low?
The participation of investors in the demand has been relatively low, which has helped maintain affordability and a healthy market without an excessive buildup of inventory.
How is the demand for the residential sector expected to evolve in the future?
The demand for the residential sector is expected to continue for the foreseeable future, driven by a consistent need for housing and a balanced contribution from luxury, mid-segment, and affordable housing segments.
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