Luxury Housing Everywhere, Affordability Nowhere. What's Going On?

The Indian residential real estate market presents a curious paradox. While a larger share of buyers continues to look for options in the mid-income level, developers across major cities like Delhi, Mumbai, and Bengaluru are steadily directing their launches towards Rs 2 crore-Rs 10 crore price range. 

Various industry data continue to show the demand-supply gap between affordable and luxury housing. To be clear on the definition, affordable and mid-end housing sections are priced below Rs 40 lakh and between Rs 40 lakh to Rs 80 lakh, respectively.

The Demand-Supply Dynamics 

According to CareEdge Ratings, homes priced above Rs 4 crore accounted for 9 per cent of new launches in Q1 2026. 

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Geopolitical and macroeconomic factors during the beginning of 2026 resulted in high costs of cement, steel, and labour. While the affordable segment faced a setback due to these elements, the premium and luxury segment remained resilient, supported by buyers who are less sensitive to inflation and volatile property prices. While rising land acquisition costs have impacted the viability of affordable projects, the premium and ultra-premium projects remained unaffected. 

Navdeep Sardana, Founder, Whiteland Corporation told NDTV, "Luxury housing today isn't just about affluence, but genuine end-user demand from a growing base of HNIs, NRIs and first-generation wealth creators who want larger homes, better amenities and long-term value. With land being scarce by the year in prime micro-markets, developers are responding to where demand is strongest and where projects are financially sustainable and right now, that's the premium segment."

A decade ago, luxury basically signified marble floors and extravagant chandeliers. Over the years, especially post-pandemic, the concept of luxury has shifted. It has been associated with smart automation, sustainable features, and practical design elements. In urban regions, flagship developments characterised by quality, sustainability, and low density are capturing demand.

In a similar vein, Adil Altaf, CEO, ANHAD Developers told NDTV, "A growing segment of end-users and investors who value larger spaces, premium amenities, and long-term appreciation. Developers are simply responding to that demand... As a developer, our focus is on creating homes that stand the test of time in value and design, and right now, that pull is strongest at the top end of the market."

Why Developers Prefer Luxury

Developers are focusing more on premium segments, given the current demand for housing from HNIs, NRIs, and other affluent segments. As per Cushman and Wakefield's India Outlook 2026 report, the real estate sector is poised for growth, given the rising participation from global investors, REITs, and growing demand across multiple asset classes. 

This also includes NRIs who are driving the growth for luxury real estate. Across India, luxury has become the key element for developers who want to rise above the pack. They aim to distinguish themselves through the launch of flagship projects that provide premium amenities. Higher margins in this segment, compared to the thinner returns on affordable housing, have further reinforced this shift in developer focus. 

Rajan Yadav, Director, Roots Developers told NDTV, "As developers, we build where the numbers make sense, and today, land, approvals, and construction costs have risen so sharply that only premium products protect margins. Luxury isn't a choice against affordability; it's often the only viable model left. Buyers seeking mid-income homes deserve better options, and we recognise that gap. But until land costs correct or policy support arrives for affordable housing, developers will keep leaning into segments where returns justify the investment. Luxury homes aren't a rejection of the average buyer, they're a reflection of what the current market economics allow us to deliver profitably."

Moreover, demand for luxury homes is also driven by CXOs and and startup founders. In urban centres like Gurugram, professionals in the tech and business sectors are driving the traction for luxury homes. There has been a rise of demand for amenity-rich homes, leading to the creation of a polycentric urban landscape. 

Looking ahead, the Indian residential real estate market, especially the luxury segment, is expected to remain resilient due to growth in infrastructure, technology, policies, and employment opportunities. While the affordable segment might stay at the backend. Without a correction in land costs or favourable policies that may offer some relief, developers will keep launching luxury segments where returns justify the investment.