The Indian real estate market continues to expand, with the current upcycle in the residential segment yet to peak. Homeownership in India remains within reach, unlike in Europe and the US, where high prices and steep interest rates make it difficult to save for a deposit. As a result, younger generations in those markets often rent out of necessity rather than choice, said Gustavo Favaron, CEO and managing partner of the GRI Institute, in an interaction with HT.com
While he does not “see clouds on the horizon yet”, developers must still do their homework and not assume everything will sell just because the market is strong, he said.
“The Indian real estate market is still expanding, and the uptick cycle of Indian residential real estate has not peaked yet,” said Favaron of GRI Institute, a global think tank of leaders in real estate and infrastructure.
"I think that here in India, people are still able to buy. Once they become so expensive, they cannot buy them, which will drive the price up. I think the whole world is suffering a living crisis. So, it is very difficult to afford to buy your own place in Europe or the US," he said.
"People always say that the new generation does not want to buy a new place and that they are happy to rent. I do not believe that. I believe that people are not buying a place in these countries because it is not affordable. It is difficult to have a deposit. The interest rates are still higher than it was before. So, whether you are sitting in New York, London or Berlin, there is little offered, and too high demand that is driving prices up. Hence, to buy, it is not affordable to buy a place in those markets,” he said.
{{/usCountry}}"People always say that the new generation does not want to buy a new place and that they are happy to rent. I do not believe that. I believe that people are not buying a place in these countries because it is not affordable. It is difficult to have a deposit. The interest rates are still higher than it was before. So, whether you are sitting in New York, London or Berlin, there is little offered, and too high demand that is driving prices up. Hence, to buy, it is not affordable to buy a place in those markets,” he said.
{{/usCountry}}As of mid-2025, the average price for a well-located upscale 2-bedroom apartment in Mumbai is around $300,000, compared to approximately $1.15 million in New York and $1.1 million in London; home loan interest rates average about 8% in India, 6.8% in the US, and 5.1% in the UK, highlighting that while Mumbai is far more affordable, it comes with higher financing costs, Favaron said.
The GRI has over 600 realtor members in India and 19,000 worldwide, including several prominent Indian developers, such as Hiranandani Group, Oberoi Realty, and K Raheja Corp.
‘Difficult to say how far we are from the peak’
Commenting on the ongoing uptick in the Indian real estate sector, Favaron said, “It’s difficult to say how far we are from the peak, I will not dare to say.”
He said that the market today is more resilient than in the past. “I think we have learned a lot from the 2008-2009 crisis, and 2020 as well, with COVID-19. I think the market has learned good lessons, and I think the developers are more prepared than they were in the past.”
"I am not saying I am very optimistic, but I would not be worried. When we look at the survey we did, I would say that most of our members expect to have a better second half of the year than the first half. And they expect the real estate to do better than it did last year as well. So, we are still growing," he said.
Real estate developers should not blindly follow trends
As a word of caution to Indian developers, Favaron advised against blindly following trends. “If I were an Indian developer, I would not just do what my competitor is doing. I would do my own analysis, my own research, and run my own numbers to decide if that location and that product are the right products.”
Pressure mounting on mid and low-cost housing
Favaron noted that while long-term demand in India’s real estate sector remains strong, there are growing concerns around affordability in the mid and low-income housing segments.
Also Read: Why rich Indians are buying marquee properties in London
Over time, “consumption (in India) will be so high that demand will remain steady. Prices may shift slightly, but real estate should be viewed as a three- to five-year game, not something measured over six to twelve months. With that in mind, I’m not worried about demand here," Favaron said.
However, he raised a red flag about rising input costs. “What does worry me is that labour and material costs are going up, making it increasingly difficult for developers to hold prices. As prices rise, homes become less affordable, particularly for the mid and lower segments. That could lead to smaller units and potentially shift the market toward a built-to-rent model,” he said.
“So, maybe that might dent (it) a bit," Favaron said.
Favaron said that the luxury segment remains largely insulated from such challenges. Luxury buyers earn enough to absorb rising costs. They understand prices are going up and are willing to pay. It’s the price-sensitive segments, mid and low-income households, that will feel the pressure. Globally, the luxury market remains more resilient because those buyers simply have the means, he explained.
India’s office market is strong amid global commercial real estate woes
According to Favaron, while inflation has improved rental yields in residential markets outside Europe, India continues to offer stronger returns in the commercial office segment.
Favaron noted that India's commercial office space holds significant potential. In London, for example, the office market was not exactly bad, but it was facing serious challenges. In January this year, things started changing.
He said that the situation is even worse in the US and parts of Europe. “There are major problems in the commercial sector, especially with Class B and C office spaces. The offices that are not AAA will be completely empty and will remain so, he said.
He said many of these buildings are empty and being converted into residences, hotels, or even urban data centres.
In contrast, India’s office market is thriving. “Every time I visit, people tell me there’s no available office space, everything is taken, and rents are rising,” Favaron said.
He attributed this divergence to differing work cultures. “The global shift to remote work hit markets like the US and Europe hard in 2022 and 2023, driving vacancy rates up. But in India, the work-from-home culture didn’t take hold as strongly, which helped sustain demand for office space,” he explained.
‘Global investors still believe in trophy office assets’
Favaron shared that global investors are watching office markets closely for the right entry point.
Also Read: Rich German families snap up trophy real estate after price drop
“In January this year, I had a conversation with a major sovereign fund, very well-known, though I won’t name it. They were preparing to go shopping, looking to acquire office buildings in London. But they were waiting for prices to drop before making their move. This shows that, in the long term, global investors still believe in these trophy assets,” he said.