India's Luxury Housing Market: Expecting Moderation in FY27

India’s luxury housing market has enjoyed an exceptional run over the past few years, driven by strong wealth creation, record equity gains, and rising aspirations among high-net-worth individuals (HNIs). However, fresh data suggests that sentiment is beginning to shift. A recent survey indicates that nearly half of India’s wealthy now expect the luxury residential market to cool in FY27. This does not signal a collapse, but rather a phase of consolidation, where buyers become more selective and returns normalise after a period of rapid growth.

According to a survey conducted among nearly 700 HNIs and ultra-HNIs, around 56% of respondents expect the luxury housing market to moderate in FY27, while 44% believe momentum will continue. The study highlights a clear change in outlook compared to the strong bullishness seen earlier. Despite this moderation, confidence in India’s long-term economic growth remains high, with a majority of respondents still optimistic about the country’s macro trajectory.

The survey suggests that demand for luxury residential real estate is not disappearing, but evolving. Nearly 57% of respondents plan to continue investing in real estate, though in a more selective manner. Buyers are increasingly focused on quality, location, and long-term value rather than speculative gains. This shift reflects a maturing luxury housing market, where informed buyers prioritise proven micro-markets and credible developers.

While physical real estate remains an important part of wealthy portfolios, equities continue to dominate investment preferences. Around 67% of respondents favour equities, followed closely by physical real estate at 64%. Commodities and financialised real estate products such as REITs, InvITs, and alternative investment funds are also gaining traction. This diversification indicates that HNIs are balancing risk and returns across asset classes rather than relying solely on property.

Among those planning to invest in real estate, city-based luxury residential property remains the preferred option. A significant share of respondents are looking at primary residences, while others are focused on investment-grade assets that can deliver rental income and long-term capital appreciation. Second homes continue to attract interest, but the emphasis is increasingly on properties that combine lifestyle benefits with defensible value.

One of the key takeaways from the survey is the moderation in return expectations. Nearly 67% of respondents now expect annualised returns of up to 15%, while only 33% anticipate returns higher than that. This marks a clear shift from the high-return expectations seen during the post-pandemic surge. The change reflects rising prices, tighter supply in prime locations, and a more realistic assessment of future growth potential.

Interest in second and holiday homes remains strong, though it has softened compared to earlier years. Among those who purchased such properties recently, farmhouses in city peripheries emerged as the most popular choice, followed by hill and mountain destinations. Beach locations and spiritual destinations also feature, but to a lesser extent. Improved road connectivity and the preference for destinations within a few hours’ drive continue to shape buying decisions.

The survey highlights a growing global orientation among India’s wealthy. A notable share of HNI and UHNI families already have members settled overseas, and interest in dollar-denominated assets is rising. Platforms such as GIFT City and international real estate investments are increasingly part of portfolio discussions. This global exposure further explains the cautious stance towards domestic luxury housing, as capital is spread across geographies.

A potential moderation in FY27 does not imply weakness in India’s luxury housing segment. Instead, it points to a healthier, more sustainable phase of growth. Developers may need to recalibrate pricing, focus on differentiation, and strengthen execution. Buyers, on the other hand, are likely to benefit from better negotiation power and improved product quality. Prime urban luxury homes in scarce, well-established locations are expected to outperform the broader market.

Industry leaders note that 2025 was a defining year for luxury real estate, supported by strong equity markets and a record IPO cycle. As the market moves into 2026 and beyond, caution is replacing exuberance. Proven micro-markets, transparent pricing, and long-term fundamentals are expected to drive decision-making, ensuring stability even as growth moderates.

India’s luxury housing market is entering a phase of measured consolidation in FY27. While nearly half of wealthy buyers expect moderation, confidence in long-term fundamentals remains intact. Investment strategies are becoming more selective, return expectations are normalising, and diversification across asset classes is increasing. Prime urban luxury homes are likely to remain resilient due to scarcity and strong fundamentals, even as overall demand becomes more cautious and disciplined in the coming years.