Demand for spacious three-bedroom apartments continues to dominate, but compact homes are emerging as a disruptor with unprecedented price surges, says a recent report by Magicbricks Research.

The report offered a compelling look at the Indian real estate market that is undergoing a transformative shift.

At nearly 50%, 3 BHK apartments have firmly established themselves as the top choice of homebuyers across 13 Indian metros in the first three months of 2025. Cities such as Hyderabad (68%), Gurugram (61%), and Noida (60%) lead the charge, reflecting a growing preference for family-friendly spaces.

For many, 3 BHKs are more than just homes—they represent an investment in comfort, privacy, and long-term value. Their continued popularity highlights a cultural emphasis on spacious, future-proof living, particularly in high-growth urban centres.

The silent disruptors

However, despite accounting for only 6% of the overall demand, 1 BHK units have emerged as the surprise market heroes with a year-on-year (YoY) price growth of 34.4%. Gurugram and Greater Noida drive the demand at 86.1% and 70.7%, respectively. Bengaluru and Hyderabad also showed strong growth, with prices rising by 30.2% and 24.5%, respectively.

What’s driving this boom? Compact homes are increasingly viewed as a safe investment option, offering affordability and flexibility amid economic uncertainties. A survey of nearly 2,000 high-intent homebuyers highlighted a growing sentiment for smaller homes, especially those under 500 square feet.

Compact homes are delivering impressive returns, with price trajectories highlighting their growing appeal.

Similarly, 2 BHK homes demonstrated robust appreciation, with Greater Noida leading at 75% YoY growth and Gurugram following closely at 58.5%. These trends underline the strong investor interest in compact homes, fuelled by their affordability and promising returns.

The tale of two Indias

Demand patterns reveal a tale of two Indias. Metros like Mumbai, Thane, and Navi Mumbai show strong preferences for 1 and 2 BHK homes, driven by space constraints and affordability considerations in these densely populated regions.

Conversely, cities such as New Delhi and Hyderabad exhibit a marked preference for larger homes, reflecting their relatively spacious layouts and aspirational buyer demographics.

India’s housing market reflects its diversity. Average residential rates range from ₹30,256 per square foot in Mumbai to a more affordable ₹8,770 in Hyderabad, mirroring the varied aspirations and economic realities of urban homebuyers.

For both investors and homebuyers, the dual narrative of 3 BHKs and compact homes presents exciting opportunities to align aspirations with market trends.

In the ever-evolving urban landscape, one thing is clear: whether you’re drawn to spacious family homes or compact, high-yield investments, India’s real estate market offers something for everyone.