Residential Sector On the Rise in South India

by Srinivasan Gopalan, Noida, January 2, 2025: The last year has been terrific for South India’s housing sector. Bengaluru, Hyderabad, and Chennai emerged as vibrant real estate markets this year because of growing buyers’ demands and rapid urbanization. As we look forward to 2025, South India’s residential sector is set for substantial growth.

Let’s review the factors that shaped South India’s housing segment this year and what the future holds.

Luxury on High

India’s luxury housing sector experienced robust growth this year, with sales of homes priced at ₹4 crore and above increasing by 37.8 per cent YoY during the first nine months of 2024, reveals CBRE. Economic growth, rapid urbanization, and easy access to financing will likely drive this trend into 2025.

South India’s luxury housing also thrived this year. Hyderabad stood out as a prominent luxury housing segment player, with sales of 1,540 luxury homes. Bengaluru and Chennai, known for their mid-range markets, also attracted luxury developments this year. Industry stakeholders attribute this shift to the premium residential segment’s ability to provide convenience, luxurious amenities and social status. Nevertheless, emphasizing luxury exclusively may not be a viable long-term strategy. It is equally essential to revitalize affordable and mid-range housing to facilitate balanced and inclusive growth.

The affordable housing segment has faced immense challenges across India so far this year. Yet, Bengaluru stood out as a hub for affordable housing. The availability of homes across various price points in Bengaluru’s prime locations adds to the affordability of its housing segment. The city added around 16,485 new units in Q1 2024, representing a 22 per cent yearly increase, reveals a Knight Frank report. Furthermore, 66 per cent of the new launches were in the midrange and premium segments.

Bengaluru’s inventory overhang has also decreased significantly from 36 months to 18 months this year. In the July-September quarter, residential prices in the city increased by 10 per cent YoY. This was the highest increase among India’s top eight cities, reveals a Knight Frank report.

Plot Twist

South Indian cities are becoming increasingly popular for plots and villas for sale. An ANAROCK FICCI survey shows that 20 per cent of property seekers now prefer buying residential plots, with Chennai, Bengaluru, and Hyderabad being the top destinations. In a post-pandemic world, plots and villas provide buyers with more customisation options and flexibility than traditional apartment buildings.

Several developers in South India have responded to this demand by launching residential plot projects that are being quickly absorbed by the market.

Launches Galore

The year was also notable for a substantial rise in new home launches across major South Indian cities. Hyderabad witnessed a 57 per cent YoY increase in new launches in the first quarter of 2024, with 22,960 units introduced compared to 14,620 units the previous year.

Remarkably, over 33 per cent of this new supply came in the higher price segment of above ₹1.5 crore. Bengaluru followed closely with a 22 per cent increase. The city introduced 16,485 units, with 66 per cent of these in the mid-range and premium categories. New launches in Chennai went up by 14 per cent YoY, with 87 per cent of the latest launches in the mid and premium housing segments.

Infrastructure Energises Suburbs 

Residential realty in South India’s suburbs is booming. For instance, areas in the northern suburbs of Bengaluru, such as Doddaballapur, Devanahalli, and Hebbal have emerged as residential hotspots. The reason behind this is the region’s proximity to IT corridors and infrastructural development such as IT parks, smooth metro connectivity, road upgrade, and more.

Consequently, North Bengaluru attracts numerous working professionals and young families. It has also become appealing for plot-based and apartment developments. Thus, branded developers in North Bengaluru are seeing swift sales in quality projects.

Likewise, Chennai is also witnessing an impressive growth in the affordable housing segment, particularly in suburban areas like Perigundi. The outlook for 2025 seems optimistic, as developers will continue leveraging infrastructure upgrades to boost residential and commercial demand in such regions.

Challenges and Solutions

Though the high-end housing sector has experienced strong growth, the long-term health of the segment relies on a balanced approach. Heavy investment in luxury homes alone cannot sustain the market. Thus, a resurgence in affordable and mid-range housing is essential. Policymakers and industry players must work together to address the lack of affordable options and introduce innovative financing solutions for supporting broader homeownership.

As part of this strategy, developers will likely focus on reducing construction costs through modular building techniques and exploring government incentives for affordable housing in 2025. This approach is expected to make real estate more inclusive, besides enabling the luxury and affordable segments to thrive simultaneously.

The Year Ahead

With a robust foundation built in 2024, South India’s residential sector will definitely undergo a booming phase in 2025. The emphasis on sustainable development, alternative housing options, and technological advancements is expected to reshape the sector and meet the evolving demands of a diverse homebuyer base. However, affordable housing is an area that would require renewed attention and stakeholders’ intervention.

As South India’s cities continue to expand, experts anticipate a strong year ahead, driven by favourable economic conditions, infrastructure upgrades, and a stable policy environment.

Homebuyer sentiment is projected to strengthen further, ensuring South Indian states remain a critical player in India’s realty sector in 2025.

The author is CEO of ArisInfra Solutions Ltd. Opinions expressed are the author’s own. 

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