NEW DELHI/BENGALURU – A year ago, media professional Esha Roy and her parents moved from their detached house in Chittaranjan Park, an affluent and upmarket locale in the capital, to a three-bedroom apartment in a high-security, gated community some 20km away in Noida.

Even though the Bengali-speaking family had felt a strong sense of community in their Bengali-dominated neighbourhood, Ms Roy’s parents, aged 77 and 81, wanted to live in a secure gated community with amenities like power backup and a pool of plumbers and electricians available on call.

Security is tight in such condominiums, with security guards restricting entry, and residents are shielded from the harsh realities of Indian life such as power cuts and water shortages.

Ms Roy’s mother, who used to stay indoors in their Delhi home, now goes out for a daily walk in the morning and evening in their gated estate, where residents can also use golf carts to get to the main gate and back. “My parents seem happier here. Every little issue you have in the house is easily sorted out,” Ms Roy said.

Condominiums like theirs have seen a dramatic increase in demand in the past five years in India. Between 2019 and 2024, residential properties in the top Indian cities of Bengaluru, Chennai, Hyderabad, Mumbai, Kolkata, Pune and the National Capital Region around New Delhi collectively saw a price increase of 44 per cent, according to property consultant Anarock Group.

Urbanisation, rising income levels and a desire to have a larger and safer living space, intensified by the disruptions caused by the Covid-19 pandemic, have triggered a steep hike in real estate prices in the major cities in India.

Mr Prashant Thakur, regional director and head of research at Anarock, said the factors driving the sales were “an unrelenting quest for home ownership after the pandemic”, aided by new launches in the middle and premium segments by large and reputable developers, and more transparent digital registration processes.

“We are seeing pent-up demand catch up post-pandemic and the price surge is because of 2019’s low price bar too,” he added, noting that greater legal accountability and fewer unscrupulous developers today have also buoyed buyer confidence. He also attributed the increase in price to inflation in construction costs.

Another reason for the price rally is the demand today for larger, premium apartments ranging from 1,200 sq ft to 4,000 sq ft or more, with airy balconies and wide common spaces in gated communities.

In Gurugram, in the National Capital Region, which has had a large influx of professionals working in multinational companies like Google and American Express, the demand has been highest for luxury and ultra-luxury projects.

Real estate giant DLF sold US$2.6 billion (S$3.4 billion) worth of apartments in three luxury projects launched over the last 15 months.

Mr Aakash Ohri, joint managing director and chief business officer of DLF Homes, said units in each of these luxury, high-rise gated community projects were sold within three to seven days of a pre-formal launch.

One of the developments, The Arbour, promised large green areas, three parking slots per apartment with electric vehicle charging stations, and an infinity swimming pool.

“The rise in demand for luxury and ultra-luxury homes in India is fuelled by increased wealth creation and economic resilience among affluent segments. This shift reflects a new appreciation for real estate as an appreciating asset and a source of tangible and intrinsic value,” said Mr Ohri.

Gurugram, together with Noida, Mumbai and Hyderabad, accounted for around 84 per cent of luxury housing sales of units priced more than 40 million rupees (S$623,000) across the top seven cities, said a report by real estate service provider CBRE South Asia.

In the southern cities of Bengaluru and Hyderabad, however, it was the mid-segment apartments of between four million rupees and eight million rupees that saw the biggest uptick, led by working professionals from the information technology and related sectors.

“The presence of more undisclosed wealth in north India pushes up luxury spending there compared with the more transparent and disclosed (professional) wealth in south India,” said Mr Amrit Hemdev, managing partner of Avenuez, a real estate investment and advisory firm that deals with the luxury residential segment.

The prices of apartments in upcoming neighbourhoods in the periphery of India’s expanding cities have climbed the most. As neighbourhoods in the city centre are saturated, most new, plush development projects are coming up in the rapidly urbanising outskirts, which are also hubs of IT and manufacturing.

The rate per sq ft in Bengaluru’s Bagaluru close to the IT and aerospace companies grew by 90 per cent from 4,300 rupees to 8,151 rupees in five years, topping the country. Hyderabad’s Kokapet and Bengaluru’s Whitefield follow with an 89 per cent and 80 per cent increase respectively, according to Anarock.

Soon after their wedding in 2019, helicopter engineer Suviko Koparde, 34, and his 31-year-old wife, who works in the IT industry in Bengaluru, decided to stop renting and buy their own apartment.

“We wanted to be close to our workplaces as well as not have to move every few years. After the first phase of Covid-19, apartment prices seemed to be climbing, so we decided to purchase one before it became unaffordable for us,” said Mr Koparde.

The couple looked for a gated community with amenities like playgrounds, a clubhouse and walking paths.

With many local builders going bust during the pandemic, the Kopardes, like most home buyers across India, looked only at properties of well-known developers in upcoming neighbourhoods on Bengaluru’s periphery, close to the IT corridor and connected by the metro train.

They finally settled on a 1,500 sq ft two-bedroom apartment with balconies, at the cost of around seven million rupees, in an almost-finished complex with 1,200 units in Varthur Gunjur, an upcoming suburb.

By the time they moved in around November 2023, the couple congratulated themselves not just on being home owners and parents of a three-year-old son, but also for making the best of the real estate boom. Similar apartments in their neighbourhood now cost almost double the amount they paid.

The demand for luxury and mid-segment properties has, however, meant that the availability of affordable housing has shrunk, as developers chase the upmarket segments, noted Mr Thakur.

For many middle-class Indians, buying an apartment in India’s top cities is only going to get more difficult.

“During the pandemic, the income levels of the upper middle class in India were not as affected as those from the lower income levels, which is why the larger houses upwards of seven million rupees are seeing the boom, but the availability of affordable housing below four million rupees has shrunk,” said Mr Thakur.

Noting that real-estate cycles last seven to 10 years, Mr Hemdev said that while neighbourhoods within 50-60km of major cities were safe from price crashes or surges, “some of the steep price surges in peripheral areas could see a fall because there is no supply constraint there,” as developers keep on building.

He reassured buyers, however, that the current moment is not a real estate bubble, but “a price catch-up” that is likely to stabilise soon.