With its critical role in the economy, the housing sector is projected to contribute 13 per cent to the national GDP by 2025, as tier 2 and 3 cities emerge as pivotal growth hubs for the sector, according to a report on Tuesday.

"Tier 2 and 3 cities are emerging as pivotal growth hubs, with smaller urban centres like Jaipur, Indore, and Kochi driving more than 40 per cent of new housing developments by 2025," said Ritesh Mehta, senior director and head (north and west), residential services and developer initiative, JLL India.

According to him, the urban homeownership rate is set to increase to 72 per cent by 2025, up from 65 per cent in 2020, supported by affordable financing options and a younger demographic entering the housing market.

Millennials and Gen Z buyers are expected to comprise 60 per cent of new homebuyers by 2030.

"Sustainability, once considered a luxury, is now a necessity in the housing market. Green-certified buildings are expected to account for 30 per cent of new residential projects by 2025, doubling from 15 per cent in 2020," said Mehta.

Green building certifications, like LEED (Leadership in Energy and Environmental Design), are becoming more common as the real estate industry prioritises sustainability.

The demand for smart homes and tech-integrated living spaces is also skyrocketing, like advanced home automation systems, including IoT devices that enhance security, energy management and overall convenience.

"Budget-friendly housing remains a key focus in India. Government policies continue to promote accessible housing, with initiatives aimed at making homeownership more accessible for the city’s middle class and first-time buyers," said the JLL report.

The definition of luxury in the real estate market has evolved, especially in the wake of the Covid-19 pandemic. There is now a greater emphasis on spacious layouts, private outdoor areas, and wellness amenities that cater to health and well-being, the report mentioned.