India’s real estate story remains strong despite global headwinds: CREDAI President Shekhar G Patel

India’s residential real estate market may be transitioning from the post-pandemic boom to a more balanced growth phase, but the long-term fundamentals remain firmly intact, according to CREDAI President Shekhar G Patel. While demand for premium housing continues to remain robust, affordability pressures in the mid-income and affordable segments are emerging as key concerns for the sector.

In an exclusive interview with Fortune India, Patel discusses the outlook for housing demand in FY27, the challenges facing first-time homebuyers, the impact of global uncertainties and the West Asia conflict on the sector, evolving NRI investment trends, and whether the growing focus on premium housing could create supply imbalances. He also outlines the policy measures needed to improve affordability and sustain long-term growth in India's real estate market.

Q: Housing demand has remained strong, led by premium segments. Do you expect this momentum to sustain into FY27?

Patel: The housing market is entering a more balanced phase now. Even though the sharp surge witnessed over the last few years has moderated, demand itself remains fundamentally strong. What we are seeing across major cities is that homebuyers are becoming far more quality-conscious. They are willing to spend more for better infrastructure, larger configurations and integrated projects. A large part of this market is end-user-driven, supported by rising incomes, wealth creation, and long-term confidence in Indian real estate. The concern going into FY27 is less about demand exhaustion and more about affordability stress in the middle-income categories.

Q: What structural challenges are impacting affordable housing and first-time homebuyers, and what policy interventions are most critical to revive both demand and supply?

Patel: Affordable housing is currently facing a structural viability challenge. The Rs. 45 lakh threshold was defined around 2018-19 and, in many urban markets today, it no longer reflects prevailing development economics or home prices. Over this period, inflation has averaged nearly 6% annually, while housing prices in several cities have risen by 8-10% annually. At the same time, land prices, approval costs, raw materials and financing expenses have all moved upward steadily.

As a result, affordability pressure is becoming more visible, particularly for first-time homebuyers and salaried middle-income families in larger urban centres. The entry barrier to homeownership is considerably steeper today than it was a few years ago. However, the underlying demand itself has not weakened. India continues to witness strong end-user aspiration for homeownership, especially among younger households and urban working families.

Affordable and mid-income housing is increasingly understood as a matter of urban sustainability, not just real estate performance. It is closely linked to sustainable urban growth and long-term economic stability. Going forward, the sector will likely require policy recalibration to ensure that housing accessibility remains viable for ordinary homebuyers.

Revisiting the affordable housing definition to align it with current market realities would be an important first step. Beyond that, faster approvals, lower financing costs, rationalisation of taxes and enhanced tax benefits for first-time homebuyers can help improve both supply creation and overall affordability in a more meaningful way.

Q: What is your outlook for India's real estate sector in FY27, and how will interest rates, global uncertainty, geopolitical tensions and affordability pressures shape housing demand?

Patel: The overall outlook for FY27 remains stable and cautiously positive, supported by urbanisation, infrastructure expansion and persistent end-user aspiration.On the tailwinds side, interest rates have moved in a favourable direction, with the repo rate easing 125 basis points to 5.25% over the past year. The decision to hold rates steady in early 2026 signals a calibrated pause rather than a reversal, which is broadly supportive of housing demand.

That said, global economic headwinds and geopolitical tensions remain watch areas. Any sustained inflationary pressure or disruption could influence borrowing costs and buyer sentiment. Affordability in larger urban centres also continues to exert pressure on first-time buyers, making policy support increasingly relevant.On balance, FY27 is expected to be a year of steady, grounded growth, underpinned by end-user demand rather than speculative activity.

Q: How is the ongoing West Asia crisis impacting the real estate sector, and how are developers managing risks around fuel prices, commodity inflation and supply chain disruptions?

Patel: Global geopolitical tensions affect the sector through commodity inflation, higher freight charges and rising fuel prices, creating margin pressure, particularly on under-construction and fixed-cost projects. The West Asia conflict has added further complexity, disrupting imports of key construction materials and LPG supplies, while also triggering reverse labour migration from urban centres.

Having navigated multiple past disruptions, most organised developers are now building larger cost buffers and more flexible procurement strategies, with a stronger push towards domestic sourcing wherever possible.

At an industry level, CREDAI has engaged with the Union Housing Ministry, urging that current disruptions be recognised as a force majeure event and seeking a blanket three to six-month RERA timeline extension to protect both developers and homebuyers.The impact, however, remains more operational than demand-driven. Housing demand continues to hold firm on the back of domestic wealth creation and end-user aspiration — with developers increasingly focused on localisation and execution efficiency to manage costs without passing the full burden to buyers.

Q: Have you seen any changes in NRI investment flows, especially from the Gulf region, amid current geopolitical uncertainties?

Patel: The ongoing West Asia conflict has introduced some short-term caution among Gulf-based NRIs. However, investment intent has not materially weakened. NRIs account for 15–20% of housing demand in India, with roughly 60% originating from West Asia, supporting mid and premium housing across Mumbai, Delhi-NCR, Bengaluru and Hyderabad.

India remains a compelling long-term destination for NRI investment, underpinned by economic growth, infrastructure expansion and relative currency stability. The structural appeal of Indian real estate for the diaspora is expected to remain intact, even as near-term sentiment is being monitored closely.

Q: Developers have been focusing more on premium projects. Do you see a risk of supply imbalance or oversupply in certain segments?

Patel: Any segment that sees a sustained concentration of supply warrants caution. Currently, premium housing demand remains healthy, and developers are responding to that market signal. However, real estate is fundamentally local in nature. While demand may be strong at a macro level, certain micro-markets could witness inventory pressure if supply outpaces absorption.The positive difference today is that the sector is far more data-driven and financially disciplined than in previous cycles. Developers are increasingly calibrating launch pipelines to actual demand, which provides a reasonable check against broad-based oversupply risks.