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Real Estate and Insurance Update – September 2025

Submitted by admin on September 18th, 2025

Property Prices Continue to Surge

September has inspired another momentum in the real estate business with the property prices recorded to be not decelerating. The home values of major metro cities are expected to increase by more than 6 percent this year and by a higher percentage in 2026 in India. Such influx is expanding the affordability gap, which pushes large numbers of first-time consumers to the rental market. Rentals also are flying high and increasing faster than inflation rates in most cities. The dream of owning a home is slowly being replaced by the idea of continuously renting a home among millions of people.

Affordable Housing Crisis Deepens

One of the greatest issues is the lack of affordable homes. It is estimated that there is a lack of close to ten million affordable units currently and it may increase by three times to come to 2030 unless it is controlled. The developers are laying more emphasis on mid and premium segment construction projects and the budget housing are undervalued. Such has been an imbalance providing opportunities to investors in the affordable housing market, although there are challenges to the financing and increasing costs of construction.

Regulatory Push for Transparency

Regulatory wise September has been one of the months of decisive action. The Supreme Court has urged state governments to empower their Real Estate Regulatory Authority (RERA) such that they are manned by legal and financial professionals. Norms of project registration are tightened, and control over the escrow accounts is going to be tightened. Also, the government has introduced a single RERA portal where buyers and investors can get real-time project information in different states. The steps will be used to reduce fraud and delays; however, developers caution of increased compliance expenses.

REITs Get a Boost

The biggest change was that of this month when Real Estate Investment Trusts (REITs) were re-classified as equity instruments. This will make more participation by mutual funds and REITs will be introduced in the mainstream equity indices. To the investors, it is improved liquidity, transparency and the opportunity to diversify portfolios without necessarily having to purchase physical property. Analysts believe that such a move will open billions of new capital to the commercial industry in India.

Insurance Premiums Enter Softer Phase

The insurance sector is moving towards a softer pricing cycle in the world. Premiums on property insurance that had soared up in recent years with claims related to the weather situation have significantly fallen by about 7 per cent in the previous quarter. The decline has been a little bit less, yet, significant in Asia. This is being brought about by increased competition amongst insurers and reduced reinsurance expenses. To property investors, this implies that the insurance costs will not be consuming as much returns any more at least in the short term.

Climate Risks Still Loom Large

Climate risks are a pervading theme in real estate and insurance despite the decline in premiums. Extreme weather events such as floods or wild fires are becoming more frequent and therefore insurers have had to narrow their coverage in places that are prone to such occurrences. There are increasing deductibles and even insurers are simply saying no to insuring property in high-risk areas. Climate-resilient building and due diligence is no longer a choice but a necessity in terms of securing long-term value to real estate investors.

New Standards for Property Risk Assessment

Under these struggles, a new international standard of property resilience assessment was launched in September. This structure means that the developers and investors must consider climate and disaster risks when they conduct due diligence, in addition to conventional environmental and structural audits. The implementation of these standards is an indication of a turning point one in which the resilience elements such as flood defences and fire-resistant materials and sustainable design may create a direct impact on valuations and insurance premiums.

GST and Insurance Shake-Up in India

Another significant tax reform that has been introduced during the month of September is one that affects the purchasers of insurance. Commissions on individual life and health cannot be claimed as input tax credit after September 22, a move that could raise the costs burden of insurers. Meanwhile, the GST on insurance premises on both new and renewed policies has been reduced to none. Although such a decrease is a positive blessing that customers are receiving, insurers continue to cope with the economic blow of losing tax credits.

Push for Rural Insurance – Bima Vistaar

There is an innovative move in the domestic insurance arena. A combination life, health and property insurance product called Bima Vistaar, which covers upto [?]5 lakh per customer, will be launched by December. This plan is tailored to increase the penetration in the rural regions where the level of insurance is at a critical level. In the case of the real estate industry, this would indirectly enhance financial stability in the villages and small towns, driving the housing demand in the semi-urban areas.

Home Insurance Penetration Still Alarmingly Low

The penetration of the home insurance in India is under 1 in spite of increasing risks. Most property owners are not covered by insurance due to the cost factor or simply, they are not aware of the extent of damage that natural calamities can cause to property. Experts in the industry allege that this exposes households to financial vulnerabilities and delays post disaster recovery. To occupy this gap, insurers are experimenting with micro-insurance and products that are bundled.

Investors Eye Affordable Segments

With property prices skyrocketing out of the reach of middle-income families, the affordable housing market is now the target market of investors. As pressure on government to solve shortages continues to rise, subsidies and policy support are likely to rise. Cost-effective developers with the ability to strike the right balance between cost and compliance and resilience can be in high demand here.

Technology and ESG in Focus

The future of the growth is determining by the sustainability and the digital adoption. The use of technology is assisting the insurers and investors to make smarter decisions through AI-driven risk assessment tools, drone-based property surveys, and a wide range of other possibilities. Premium valuations and preferential insurance are also being offered on ESG-complaint, climate resilient properties. Builders that embrace the use of environmentally friendly materials and disaster-resistant designs are bound to gain in the local and international markets.

Outlook for Late 2025 and Beyond

Looking ahead, experts believe the softening of insurance premiums will continue, provided natural disasters remain within manageable levels. Real estate prices, however, show no signs of cooling, especially in urban India where demand far exceeds supply. Regulatory tightening will keep developers on their toes, but greater transparency should ultimately benefit buyers and investors alike. The interplay of climate risks, technology, and policy reforms will define how both industries evolve into 2026.