India’s real estate sector is witnessing unprecedented growth. The housing demand is projected to reach 93 million units by 2036, driven by urbanization, population growth, and economic expansion. While national price growth averages around 6% annually, tier-2 and tier-3 cities like Bhopal, Lucknow, and Coimbatore are seeing property values rise by over 20%.
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Housing Demand to Reach 93 Million Units by 2036
The expected surge in housing demand stems from several key factors:
- Population rise in both urban and rural areas
- Favorable macroeconomic indicators
- Demographic shifts and lifestyle changes
- Migration to cities due to job opportunities and infrastructure development
Cities like Bhopal, Lucknow, and Coimbatore are leading the race in both housing demand and supply due to their affordability and rapid development.
Real Estate Growth: Tier 2 and 3 Cities Are the Future
According to a report by CREDAI and Liases Foras, the next wave of real estate expansion will come from smaller cities. CREDAI President Boman Irani notes that:
- 44% of 3,294 acres of land acquired by developers is in tier-2 and tier-3 cities.
- These cities are outpacing metro areas in development speed and sales.
Additionally, unsold inventory in India stood at 10.4 lakh units in 2024, down 3% from the previous quarter. However, 25% of these projects were launched before 2016, highlighting outdated supply. Interestingly, inventory levels in tier-2 cities dropped significantly to just 20 months—well below the national average of 26 months.
Government Support and Affordable Housing Initiatives
The Indian government’s focus on “Housing for All” is pushing developers to prioritize affordable housing. Key policies include:
- Subsidized loans for low-income buyers
- Relaxed FDI norms in affordable housing
- Infrastructure status for affordable residential projects
This shift is causing a sharp rise in affordable housing projects, especially in emerging commercial zones across the country.
Key Drivers of Real Estate Growth in India
Here are the critical elements fueling India’s housing boom:
| Driver | Insight / Data |
|---|---|
| Rapid Urbanization | 70% of the world’s population to live in urban areas by 2050 |
| Population Growth | Asia-Pacific to hold 40.2% of global real estate share by 2025 |
| Migration Trends | Urban zones to cover 62.4% of residential market by 2025 |
| Affordability Challenges | Affordable housing will comprise 41.6% of market in 2025 |
| Government Policies | Subsidies and loans are reshaping housing access |
| Infrastructure Development | Smart Cities, metro expansions, expressways boost real estate |
| Private Sector Investment | Global real estate value to rise from $534T in 2025 to $648T by 2032 |
| Land Constraints | Vertical growth due to tight urban regulations |
| Housing Shortage | Low new supply continues to drive up prices |
| Technology Adoption | Rise of smart homes and proptech innovations |
| Sustainable Construction | Growing preference for green buildings |
| Market Competition | Flats expected to capture 49.3% market share in 2025 |
| Middle Class Rise | 41.6% of demand will come from middle-income groups |
| Rural to Urban Shift | Urban residential demand to rise by 62.4% by 2025 |
| Financing Options | Low interest rates, flexible EMIs boost homeownership |
| Regulatory Environment | Stringent housing codes promote safe and legal construction |
| Real Estate Market Growth | CAGR of 2.8% expected globally (2025–2032) |
| Job Creation | Real estate fuels construction and services employment |
| Economic Impact | Residential real estate to be worth $534.37T in 2025 |
Conclusion
India’s real estate story is entering a transformative era. The projected housing demand of 93 million units by 2036 highlights the sector’s scale and potential. Backed by smart city projects, favorable government schemes, and a growing middle class, India is well on its way to becoming one of the world’s largest residential real estate markets.
With tier-2 and tier-3 cities taking the lead, and rising demand for affordable housing, developers and investors must pivot toward long-term, inclusive strategies. Whether you’re a buyer, builder, or policymaker, the future of Indian real estate lies in accessibility, sustainability, and scale.
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Frequently Asked Questions
Q. Why is housing demand in India growing so fast?
A. India’s urbanization, population increase, and economic growth are driving high housing demand, especially in Tier 2 and 3 cities.
Q. What is the projected housing demand by 2036?
A. According to CREDAI, India will need 93 million residential units by 2036 to meet urban and rural demand.
Q. Which cities are seeing the fastest growth in housing prices?
A. Smaller cities like Bhopal, Lucknow, and Coimbatore have reported price hikes of over 20% annually.
Q. What role do government policies play in real estate growth?
A. Schemes like Housing for All, PMAY, and interest subsidies are enabling access to affordable homes.
Q. Is affordable housing still a good investment?
A. Yes. It constitutes 41.6% of the housing market in 2025 and is in high demand across urban India.