Why high-end homes are outpacing mass market?

Mumbai, Nov 02

In every housing cycle there comes a moment when the numbers stop being just a metric and begin to reveal in which direction the market is heading. In India, that moment has arrived. The residential sector is not simply bouncing back from the slowdown of recent years; it is rearranging itself in ways that could define the next decade.

While the important and vital middle and affordable segments are navigating headwinds, the luxury housing market is not just holding steady, it is pulling ahead. This is not a passing ripple caused by a pandemic rebound or a shift in lending rates. What is unfolding is the result of years of changing buyer preferences, sharper developer strategies, and an economic climate that increasingly rewards premium positioning. The luxury home has moved from being an occasional indulgence for a few to a serious aspiration for a much wider share of buyers.

The luxury housing segment continues to witness remarkable growth in Bangalore driven by a combination of economic, social, and lifestyle factors - the city’s thriving IT industry, employment opportunities by corporates & MNCs, development of tech parks in multiple key areas, cosmopolitan appeal, high rental yields and infrastructure development amongst others. The city has seen rapid growth in the number of HNIs and successful entrepreneurs working in tech and startup ecosystems who seek premium living spaces that reflect their status and provide an elevated lifestyle. Young affluent investors are increasingly allocating significant portions of their wealth to residential assets. Many NRIs are investing in Bangalore's real estate due to favorable returns, reinstating real estate as one of the safest and most reliable financial options. With Bangalore's real estate landscape evolving rapidly, the demand for luxury housing continues to grow, reshaping both the city's skyline and its lifestyle trends. Bangalore’s real estate market remains an attractive proposition for high-end buyers seeking modern and premium living environments and the city’s luxury real estate segment is poised for sustained growth.

Talking to Bizz Buzz, Anjana Sastri, Director - Marketing, Sterling Developers says, “The year-on-year demand for homes in the Rs 3-5 crore segment grew at 28%. Recent reports also highlighted a rising interest in second and holiday homes, with 54 per cent of respondents considering properties in hill or beach destinations.”

Goa, Alibaug, and Kasauli have observed appreciation in capital of 9% to 12% annually, with select areas in north Goa recording even up to 20% returns.

The demand is not just sentimental, it is financial. In 2025, Goa’s home prices surged by an extraordinary 66.3% year-on-year, while luxury villas above Rs 15 crore began yielding rental returns of 30–40%. North Goa offers average rental yields of 8–9%, compared with 6–8% in South Goa, figures that comfortably outperform most Indian metros.

For many home buyers today, a home is a personal reflection of who they are and what matters to them. It is beyond just a purchase, the buyer now pays close attention to every element - whether the amenities and privacy truly match the elevated lifestyle they have in mind. More recently, questions about sustainability of a property have taken center stage and are a crucial part of the purchase decision. Developers too are taking notice and have been quick to adapt to this change.

Lincoln Bennet Rodrigues, Chairman and Founder, Bennet & Bernard says, “Those buying at the high end are also far less rattled by swings in interest rates. A large share of them rely on their own funds instead of heavy loans, which keeps this segment moving even when the broader market slows. That financial cushion has helped entrench the idea of premium property as both a lifestyle upgrade and a relatively safe store of value.”

Developers who maintain a mix of luxury and mid-market luxury projects are better placed to tackle market changes. The focus should also be on expanding the infrastructure into areas which are desirable for buyers. The challenge now, and in the years to come, is figuring out how to keep redefining what luxury really means. Buyers are asking for more than grand design. They want homes that respond to climate change and spaces that support health and well-being. These are no longer seen as add-ons but have become baseline expectations.

As professionals and entrepreneurs continue to experience significant wealth creation, there will be an increased appetite for premium homes that reflect their success and provide an elevated lifestyle. Together, these catalysts are driving the premiumization trend, making luxury homes more accessible to a broader segment of buyers.

EoM.