The year 2024 has proven to be a transformative period for the real estate industry, marking a revolution in the way we perceive, design, and utilize spaces. As we approach 2025, this wave of innovation and growth shows no signs of slowing down, particularly in India’s top property markets. From the bustling metropolises to emerging urban hubs, the sector has seen unprecedented changes fueled by technological advancements, shifting consumer preferences, and robust government initiatives.
Let’s delve into the trends that redefined the real estate landscape in India in 2024.
Key Real Estate Trends in 2024
- Office Space Demand Expands Beyond Metros
India’s office market outperformed everyone’s expectations in 2024, with the highest leasing activity of 9 million from January to September on record, indicating strong confidence among global and domestic occupiers. In the January-September period this year, Bengaluru, Hyderabad, and Pune completed around 37.5 million sq. ft. of new office space, accounting for 63% of the total supply.
While gateway cities like Bengaluru, Delhi-NCR, Hyderabad, and Mumbai continue to dominate the demand, Pune and Chennai are seeing considerable growth due to increased infrastructure, premium office supply, and a skilled talent pool.
Outlook for 2025: Office absorption in the country is likely to remain strong, expected to touch ~70 million sq. ft. by the end of 2024. This upward trajectory is expected to continue in 2025, as occupiers are likely to expand their footprint across major markets.
- Premiumization Takes Centre Stage in Residential Sector
According to a report by CBRE, in the January to September period, the premium and luxury housing categories in the residential sector collectively accounted for 16% of total housing demand, up from 6% recorded in 2019. Notably, the changing demography of discerning homebuyers is redefining luxury housing in the country.
The preferences of most of the modern homebuyers in India have shifted from conventional bungalows towards apartments that offer a comprehensive suite of services, including home customisations, property management services, gated communities, and world-class amenities. Going forward, these premium amenities are anticipated to become a major selling point for luxury residential projects in the country.
Outlook for 2025: The luxury housing market is poised for further growth, with a focus on customization and experiential living. Developers will likely explore niche markets in Tier 2 cities, catering to the rising affluence in these regions.
- Rise of High-Street Retail
This year, high-street retail emerged as a dominant trend in India, capturing the interest of both consumers and investors. These premium shopping avenues have proven resilient in the face of e-commerce growth, offering a unique blend of accessibility, exclusivity, and experience. Millennials are increasingly giving preference to high-street retail for its vibrant atmosphere, convenience, and a wide range of offerings, from luxury brands to curated local stores.
Outlook for 2025: India’s consumer spending is expected to increase by 12% by the end of 2024. Besides this, retail sales are projected to grow by 7% year-on-year during the same period. Additionally, rising demand from emerging product categories, combined with limited available retail space, is likely to push up rental prices in the retail segment. However, these increases will vary based on factors such as the developer’s reputation, the location of the property, and the positioning of malls.
- 3PL Players Continue to Dominate The Leasing Activity
The industrial and logistics sector emerged as the backbone of India’s e-commerce boom in 2024. This can be evident from the fact that industrial and logistics (I&L) leasing activity across the country reached 27.5 million sq. ft. in the first nine months of this year, witnessing a moderation on an annualised basis. Notably, cities like Delhi-NCR, Kolkata, and Bengaluru dominated the absorption, accounting for almost 61% of the total space take-up.
In terms of tenant sectors, third-party logistics (3PL) players accounted for around 39% of leasing activity, with occupiers outsourcing storage and delivery to reduce lead times and costs. Engineering, manufacturing, and retail enterprises used approximately 30% of the total space.
Outlook for 2025: With continued growth in e-commerce and global trade, the industrial and logistics sector will remain a key driver of the real estate market. The focus will shift towards multi-level warehouses and smart logistics parks in urban centers.
- Institutional and Domestic Investors Drive Capital Inflows
During Jan-Sep period, institutional and collective vehicle investors made up nearly 40% of investments in India’s real estate sector. Developer companies also played a key role, contributing over 41% of total inflows. Domestic investors (predominantly developers) invested around USD 6 billion during this period, making up about 65% of the total capital. Meanwhile, foreign investors contributed approximately USD 3.1 billion in the same timeframe.
Outlook for 2025: Driven by increased investment in commercial real estate and a robust pipeline for residential land acquisitions, overall equity investment in real estate is expected to reach USD 10–11 billion by the end of 2024. Therefore, the outlook for institutional investments in Indian realty sector looks promising in the upcoming year.
The Road Ahead
As 2024 comes to a close, the real estate industry stands at the cusp of unprecedented opportunities and challenges. The trends that shaped this revolutionary year are likely to evolve further in the next year. For investors, developers, and consumers, staying ahead of these trends will be crucial in navigating this dynamic market.
