'No place to hide': Aswath Damodaran says real estate offers no refuge for India's middle class

India’s real estate market may be booming on paper, but valuation guru Aswath Damodaran warns it’s built on shaky ground, calling it “even more overvalued” than the country’s equity markets and offering little refuge for investors seeking value.

In a podcast with NDTV, Damodaran didn’t mince words about the dilemma facing domestic investors. “If Indian stocks are overvalued, what exactly are you going to do? You’re going to buy Indian real estate, which is even more overvalued in many ways?” he asked.

Damodaran has long criticized India’s property market as speculative and disconnected from fundamentals. 

Despite surging valuations — the sector grew to $482 billion in 2024 and is projected to more than double by 2030 — he argues that cultural preferences, poor regulatory enforcement, and unsustainable investor demand have distorted prices.

Rental yields in major cities remain among the lowest globally, a red flag in Damodaran’s view. “Prices are not being set by utility or cash flow,” he’s said previously, “but by belief and inertia.”

Affordability data supports his skepticism. In Mumbai, households spend up to 48% of their income on housing. Meanwhile, average residential prices rose 6.5% in 2025 and are projected to jump another 7.5% in 2026. The fastest-growing segment? Luxury homes priced between ₹1–3 crore — now nearly half of all sales.

While regulatory reforms like RERA have improved transparency, Damodaran argues they haven’t reined in the market’s momentum. Office leasing hit a record 79 million sq. ft. in 2024, and FY2025 investment topped $6.99 billion, but fundamentals still lag.

As investors pile into new asset classes like REITs and data centers, Damodaran’s warning is stark: “There is no easy place for [Indians] to put their money.”