The Future of Mid-Segment Homes in India: Trends and Challenges
With rising demand for luxury homes and declining interest in affordable units, the mid-segment housing market in India is facing a supply crunch. What does the future hold for this crucial segment?
Mid Segment HomesLuxury HomesAffordable HousingReal EstateIndian Housing MarketReal Estate NewsJul 15, 2024
According to a report by Knight Frank, the mid-segment had a strong 32% market share in the total demand in the first six months of 2024. However, with supply falling, the future of mid-segment housing in India remains uncertain. Anuj Puri, chairman of Anarock Group, said that steep land prices and inflationary construction costs have driven a shift in the trend towards luxury homes.
Developers now see higher returns in the costlier segment, with a growing interest in costlier homes pushing margins higher. Vivek Rathi, head of research at Knight Frank, said that if a developer had five land parcels in different stages of development, they would put in all of their capacity into developing premium homes there.
The National Capital Region (NCR), especially Gurugram, has seen a significant shift towards luxury homes, with zero project launches in the mid-segment between July and December last year. Data sourced from CBRE showed that supply fell to 952 units last year from 4,392 in 2021.
In the coming quarters, the new supply of mid-segment homes is likely to remain strained as the focus on the luxury segment continues. However, the impact on prices may not be significant, with over 175,000 units available for sale in this segment currently.
Experts suggest that potential buyers in this category may need to adjust their budgets, with some moving towards higher price brackets if financially feasible, while others may need to consider more affordable options or smaller units within the same segment.
Frequently Asked Questions
What is the current market share of mid-segment homes in India?
The mid-segment had a strong 32% market share in the total demand in the first six months of 2024.
Why is there a decline in mid-segment supply?
Industry experts attribute the decline in mid-segment supply to rising land prices, more buyer interest in luxury homes, and developers' higher profit margins in pricier properties.
What is the impact of luxury home sales on the mid-segment market?
Developers now see higher returns in the costlier segment, with a growing interest in costlier homes pushing margins higher.
How will the mid-segment market fare in the coming quarters?
The new supply of mid-segment homes is likely to remain strained as the focus on the luxury segment continues.
What options do potential buyers in the mid-segment have?
Experts suggest that potential buyers in this category may need to adjust their budgets, with some moving towards higher price brackets if financially feasible, while others may need to consider more affordable options or smaller units within the same segment.
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