Real estate is having its day in the sun with pre-sales data from property developers such as Macrotech and Sobha highlighting sustained growth in demand across segments. While much of the rising interest rates- and input cost pressure-defying growth is coming from the country's biggest cities, markets such as Kolkata and Chennai might need more to attract buyers.

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So what makes the current uptick in demand so special? Higher demand for realty comes amid home loans rapidly becoming more expensive — a sign that people are choosing to enter the market despite a rising cost of money.

Many experts are betting big on real estate as an investment class more than two years into India's first full lockdown to curb COVID-19 infections. That even as input costs continue to haunt developers, forcing them to raise property prices.

The latest sets of data shows a turnaround in the property market following a lull during the depths of the pandemic, and comes at a time when the economy is shifting away from a low interest rate regime — which indicates that the current trend may be here to stay, aiding the long-term prospects of the industry.

India's top metros are powering the surge in demand for real estate. According to Knight Frank, the property markets in Mumbai, the NCR, Chennai, Kolkata, Hyderabad, Bengaluru, Pune and Ahmedabad have clocked substantial growth in the first six months of 2022.

Sales in the eight markets saw an average increase of 61.5 percent in January-June 2022, higher than 59 percent in the in the entire 2021, according to the property consultant.

Volumes in the eight markets reached the highest level recorded since the six months to June 2013 even as the RBI hiked the key lending rate by 90 basis points in May and June. A higher repo rate — or the key interest rate at which the RBI lends money to commercial banks — leads to a higher EMI on a home loan.

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Knight Frank estimates that a 90 bps increase in the home loan rate means an average 6.97 percent increase in the EMI load on the borrower.

This means an EMI of Rs 26,742.5 instead of Rs 25,000 pre-rate hikes if a bank passes on the entire revision in the benchmark to the customer.

Real estate as an investment bet

Seven markets — the Delhi NCR, the MMR, Kolkata, Chennai, Bengaluru, Hyderabad and Pune — remain the main hotbeds for investment, as well as Tier 2 and Tier cities with new infrastructure coming up, Anuj Puri, Chairman of ANAROCK Group, told CNBCTV18.com. "Elevated input costs and RBI rate hikes willy only have short-term repercussions on the residential market," he said.

But a word of caution from the real estate veteran: "Not all options are created equal."

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For instance, Lucknow is already seeing significant real estate growth and will go on to be one of the hot destinations, influenced majorly by a slew of infra projects already operational or upcoming such as Purvanchal, Bundelkhand, the Ganga Expressway and the UP Defence Corridor, Puri explained.

And for the real estate investor, there are options aplenty in the current boom.

"Unlike earlier, the millennials have become an integral part of the ever-growing residential demand... To say that only the listed developer’s good performance is proof enough for the bright long-term prospects of real estate is not entirely true," said Puri.

The lion's share in the country's housing sales still belongs to unorganised players, at 72 percent, and almost 16 percent with listed players.

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(Edited by : Akanksha Upadhyay)