Bengaluru asset manager explains how luxury housing boom is pushing higher rents in cities like Delhi, Mumbai, Hyderabad

India’s top cities are in the middle of a luxury housing boom—but it’s not just the rich who are feeling the effects. A Bengaluru-based asset manager’s recent post on social media has sparked fresh debate about how this wave of high-end real estate is quietly inflating rents for everyone, including middle-class renters who have nothing to do with luxury properties.

A market that defies logic

Normally, when housing supply increases, rents are expected to ease. But that’s not what’s happening in cities like Bengaluru, Delhi-NCR, Mumbai, and Hyderabad. Despite a flood of new real estate projects, rents are only going up—and the ones feeling the heat aren’t the buyers of luxury apartments, but everyday tenants.

The reason? Most new homes being built are not affordable or even mid-range. They’re premium or luxury units priced for high-net-worth individuals (HNIs), non-resident Indians (NRIs), and global professionals. These homes aren’t being bought to live in. They’re being bought as assets—to park wealth, not to solve the housing demand.

Fewer affordable homes, rising demand to rent

At the same time, middle-income families and professionals continue to rent because owning a home in major metros is out of reach. This mismatch has created a crunch. Developers prefer building luxury projects that promise better margins, leaving very little new supply in the affordable and mid-range categories.

With limited stock and steady demand, rentals in “liveable” neighbourhoods—close to schools, offices, and public transport—are seeing consistent jumps. And once a luxury tower comes up in the area, the rest of the locality follows suit.

For example:
In Mumbai, a ?3.5 lakh/month flat in Bandra sets a new benchmark. Suddenly, ?80,000/month for a nearby 2BHK doesn’t seem extreme.

In Gurgaon, DLF’s luxury apartments are pulling up rents even in older sectors like 56 and 57.

This ripple effect, driven by investor-led luxury supply, is distorting the rental market.

Urban renters paying more for less

The result is clear: tenants are shelling out more just to stay in the same locality, even if the house itself hasn’t improved. Some are downgrading to smaller spaces. Others are forced to stretch budgets, often without better amenities or living standards.

The Bengaluru asset manager who flagged this trend said, “Luxury is booming—but livability is straining.” That’s not just a catchy line. It sums up a growing concern that India’s housing story is tilting toward returns, not residents.

Could this become a policy issue?

With developers chasing the high-margin luxury market and neglecting mid-income housing, the imbalance is starting to show. If this pattern continues, India’s urban centres could face a deeper affordability crisis—not because we aren’t building enough homes, but because we aren’t building the homes people actually need.

Rising rents may soon stop being just a personal financial headache—and become a question of public policy.