Sudden surge of investors in Indian real estate raises concerns of market distortion

The Indian residential real estate market is seeing a significant influx of investors, a trend that experts believe is crowding out genuine homebuyers and end-users. This trend raises concerns about a potential slowdown in sales and an unsustainable rise in property prices, which could make homes unaffordable for many.

Key markets such as the National Capital Region (NCR), particularly Noida and Gurugram, are seeing price increases of up to 20% year-on-year, which experts cite as evidence of an investor-driven market.
Experts add that there is visibly a slowdown in launches and the “frenzy surrounding bookings during these launches.”

Dhruv Agarwala, Group CEO of Housing.com and PropTiger.com, warned that the surge in prices could push out genuine buyers.

"As prices continue to climb, it's natural for speculators and investors to enter the market, hoping for a strong ROI, which makes it increasingly expensive for genuine homebuyers. While end users are still present if this upward trend persists, we could soon face a situation where it becomes nearly impossible for them to afford homes,” Agarwala told CNBC-TV18.
Agarwala noted, "This year, prices haven't increased that much, to be honest. In the more recent couple of quarters, we've also noticed that the frenzy has almost vanished—like how new projects in Gurgaon would get launched and sold within a few hours. I think this is a positive shift for the market; it's never healthy for such craziness to persist. Hopefully, with demand becoming a bit more tempered now, it will help keep prices stable. Launches are expected to be more realistic in terms of supply, which is overall good for the market.”
When it comes to sales, it’s a mixed bag of trends, however. The residential sales in the first half of 2024 are not that healthy, and a slowdown in sales is emerging. Barring Bengaluru and Delhi-NCR, Housing.com data shows a 6% sequential decline in sales from 1,20,642 units in the first quarter to 1,13,768 units across key markets—Ahmedabad, Chennai, Hyderabad, Kolkata, Pune and Mumbai.