Affordable homes no longer attractive to investors as luxury offers higher returns

Affordable homes, priced under ₹40 lakh per unit, may not be attractive anymore, not just for developers but also for investors, with the segment seeing a 26 per cent price rise over three years since 2022 versus 40 per cent returns from luxury homes priced ₹1.5 crore and above.According to real estate research firm Anarock data, luxury homes in India’s top seven realty markets saw their prices rise from ₹14,530 per square feet (sq ft) in 2022 to ₹20,300/sq ft for the year-to-date period of 2025.

- SANKET KOUL

On the other hand, the price rise for affordable units was tempered at ₹5,299/sq ft for 2025 from ₹4,220/sq ft in 2022.

This divergence, industry executives say, comes on the back of demand for luxury homes outpacing that in other segments due to consistent appetite for bigger homes by branded developers in superior locations.

Aakash Ohri, joint managing director and chief business officer at DLF Homes, said that the growing significance of homeownership, bolstered by strong consumer confidence in the sector over recent years, has accelerated demand for luxury housing, leading to a sharp appreciation in prices across key NCR (National Capital Region) markets.