There is slow yet substantial change taking place in the Indian urban setting. As the standard of living improves and cities become more congested, homebuyers — especially in the Indian context — seek smarter and more adaptable, flexible housing solutions. The 2.5 BHK configuration seems to be gaining popularity among working professionals, nuclear families, and even investors. The change has only accelerated in the last two decades because of socio-economic factors such as the rising availability of remote work, urban migration, nuclear families, dual-income households, and a need for greater privacy. In the given context, the 3 BHK can be financially daunting, while a 2 BHK in this situation becomes suffocating. With its “half” room, the 2.5 BHK offers the best of both worlds — and that is precisely where its advantage lies. 

What makes the 2.5 BHK tick? 

The main distinction between the 2 BHK and the 2.5 BHK is the addition of a small room — usually around 8x10 feet or smaller. Though not ample for a full-sized bedroom, this small area can be used for a wide range of things. It can be crafted into a soft office, study, prayer room, hobby area, or even a tiny guest room. Changes to modern life can be attributed to the increasing popularity of this format. Noteworthy factors include: 

Remote and hybrid work models: There has been a sustained need for home offices or quiet zones ever since the pandemic, which allows for productive remote or hybrid work. The “half” room serves as a professional space that doesn’t interfere with household routines.

Growing children: There are families with toddlers or school-aged children who often need an additional study or playroom, but can’t be comfortably accommodated within a standard 2 BHK.

Frequent visitors or elderly parents: A large part of the Indian population continues to accommodate visiting parents or extended family for long periods of time. These families can readily house them without any loss of general everyday comfort in a 2.5 BHK.

Cost-effective upgrade: The 2.5 BHK is relatively less expensive compared to a 3 BHK and comes with lower EMIs, maintenance, and tax implications — making it a practical choice for middle-income earners.

Buyer behaviour and market response Recent trends in the urban housing markets indicate a sharp increase in the demand for 2.5 BHK units in Bengaluru, Pune, Hyderabad, Chennai, and certain areas of the Mumbai Metropolitan Region. 

Developer strategies and design innovations

Now, real estate developers are contorting floor plans to utilise the new “half” room. Some are providing modular options that enable the space to either be opened up or enclosed depending on the buyer’s preferences. In some cases, the 0.5 room is now being strategically placed to capture natural light, enhance ventilation, or provide better acoustic separation — the room is highly functional even within limited space.

A glimpse into the future

Aside from a room, the 2.5 BHK offers myriad opportunities. For couples just starting a life together, it could translate into a space needed to enable a new business idea. For children, it could mean focused academic attention. For professionals, it allows for greater separation between work and home life. These cities are well-connected and serve as hubs for young professionals and IT sector employees, thus serving as a hot market for first-time homeowners who are value-conscious. This demographic tends to view this format as a long-term investment that is flexible enough to cater to persisting family needs, thus allowing less urgency to upgrade to larger homes later on. This configuration enhances these clients’ value propositions. Even basic housing units are more appealing to real estate investors, as they can understand the functionality for a broader target market.

A major road project has been launched along the East Coast Road (ECR). A four-lane elevated corridor, covering 14.2 km from Thiruvanmiyur to Uthandi, will soon be constructed to ease heavy traffic congestion. The project cost is estimated at ?2,100 crore.

The corridor will start near a major landmark in Thiruvanmiyur and extend up to Uthandi. It will be built along the road median with support pillars and will also include pedestrian pathways. The structure will have a width ranging from 16 to 20 metres and a clearance height of 5.5 metres for vehicles travelling below.

International construction tenders were issued on August 26. Officials confirmed that the project will follow a hybrid financing model combining both engineering-procurement-construction and toll-based operation methods.

The current travel time between Thiruvanmiyur and Uthandi during peak hours is about one hour. Once the elevated corridor is completed, motorists heading towards Mamallapuram, Puducherry, and Cuddalore are expected to cover the same stretch in just 15 to 20 minutes.

The project will ease pressure across 13 heavily congested junctions, including Neelankarai, Kottivakkam, Vettuvankeni, Injambakkam, Akkarai, and Panaiyur. Exit ramps are planned at several key points along the route. The corridor will operate as a toll road under a closed-gate system, with charges based on the distance travelled.

In addition to reducing congestion on ECR, the corridor will serve as an alternative route for commuters travelling from Adyar to Kelambakkam, Thiruporur, and Mambakkam, reducing traffic on the busy parallel route. The section currently handles nearly 70,000 passenger car units per day, and officials expect the new elevated stretch to significantly streamline movement for both local and long-distance travellers.

Alongside this project, the six-laning of a 9.2 km stretch between Thiruvanmiyur and Akkarai is nearing completion, with about 90 per cent of the work finished. At present, the state’s longest operational elevated corridor is 7.3 km in length. Upon completion, the Thiruvanmiyur–Uthandi corridor will become the longest elevated roadway of its kind in the state.

Greater Chennai Corporation (GCC) was called "negligient and indolent" by Madras high court, in complying with the orders of the court in true spirit. The court said that instead of executing lock-and-seal notices issued to unauthorised constructions, GCC was giving opportunities to occupiers of the buildings to pursue other remedies. This pertained to a petition that sought lock-and-seal of a building at Virugambakkam. When it came up for hearing on April 3, the court condemned GCC for not acting on an identical writ petition in 2023. GCC sought four weeks' time, and the matter was listed on April 30, but was taken up for hearing on Aug 12. Since GCC did not comply with the court's direction till then, the bench took suo motu contempt proceedings, and summoned corporation took suo motu contempt proceedings, and summoned corporation the court that a private bank, one of the occupiers of the building filed against eviction. Holding that corporation officials were guilty of wilful disobedience of the orders of the court, the bench, however, accepted the apology of the officials since the said premises were locked and sealed on Aug 15.
 

As many as 45 cities out of 50 registered an increase in property prices during the first quarter of 2025-26, according to data released by the National Housing Bank (NHB). Out of the 50 cities covered, 5 cities registered a decline in the property prices on an annual basis. Howrah registered the maximum decline of 6.1 % followed by Kochi (5.5 %) and Thiruvananthapuram (4.8 %)," the latest residential housing price index NHB RESIDEX released on Thursday. The 50-city Housing Price Index (HPI), based on valuation prices of properties collected from banks and housing finance companies, recorded an annual increase of 5.7 % during the first quarter of the current fiscal compared to 6.6 % a year ago, it added. Seven key primary residential markets witnessed an appreciation in property prices during April-June 2025. Primary residential properties in Ahmedabad witnessed an increase of 6.8 % while those in Bengaluru rose by 9.1 %, and in Chennai by 7 %. On a quarter-on-quarter basis, the 50-city index registered an expansion of 0.5 % in April-June period. The index has shown an increasing trend on the Q-o-Q basis since September 2021.
 

A foreign real estate investor is in the process of selling an industrial facility in Chennai that is currently leased to a major electronics manufacturing firm, according to people familiar with the development. The 750,000 sq ft property is expected to fetch around ?600 crore, and several global investment groups are reported to be bidding for it.

One source said the asset is on a long-term lease and holds significant value because high-demand electronic products are manufactured there. The investor’s board is reassessing the process after receiving initial bids, and although multiple international firms have expressed interest, a decision on whether to invite revised offers has not been made yet.

Industry insiders estimate that about 750,000 electronic devices are produced at this facility, including units undergoing refurbishment. They described it as a high-end industrial complex and one of the largest of its kind in the country for this type of manufacturing.

Parties involved in the transaction declined to comment on the matter.

A recent industry survey indicates that a majority of manufacturers are expanding operations due to improved infrastructure support, with most reporting better logistics access driven by government initiatives. The study also noted strong optimism about the positive impact of ongoing national infrastructure development programmes

The significantly increased fee for transferring property records has drawn criticism from individuals who own plots in government-developed layouts. Property owners say they are not opposed to paying a fee for transferring ownership documents, but they object to the steep hike, arguing that the revised amount is arbitrary and places an unnecessary financial burden on those who simply want to update ownership records without receiving any additional services or benefits.

A major grievance is that the same fee is being charged for transferring ownership to a dependent after the death of the original owner as is charged for regular property sale transactions. Residents say they understand a higher fee for transfers involving sales, but believe that transfers to legal heirs should not be treated the same way.

They argue that a separate category should have been created for inheritance-related transfers instead of equating them with property sales. Residents say they have submitted written appeals to officials requesting a review of the fee revision, noting that it places an undue burden on dependents. However, despite assurances that the matter would be addressed, no action has been taken so far.

An international development-focused investor has made an equity investment of ?170 crore in a housing finance institution that specializes in serving low-income, first-time homebuyers.

The funding will help the institution expand its operations within its current regions in India and strengthen its technology infrastructure to improve efficiency, customer experience, and digital service delivery.

The institution currently manages assets exceeding ?1,000 crore.

A financial services firm has announced that it has signed an agreement to divest its entire stake in its affordable housing finance business to another lending company for ?430 crore. The agreement, approved by the seller’s board, is subject to shareholder, regulatory, and other third-party approvals.

As of June 30, 2025, the housing finance business had assets under management of ?1,640 crore and operated across 100 locations, serving over 18,000 customers. It provides home loans, self-construction loans, home improvement loans, and loans against property.

Advisors were engaged on both sides of the transaction for financial, legal, and tax matters.

Commenting on the sale, a senior executive from the selling firm said that the housing finance business has seen sustained profitable growth since its inception. The executive added that the buyer is a capable and ambitious platform that will significantly scale and drive the operations of the housing finance business going forward.

A real estate developer has acquired nine acres of land at Perungudi along the Old Mahabalipuram Road (OMR) in Chennai on a long-term lease, marking one of the most significant transactions on the city’s IT corridor in recent years.

The site has been leased for 55 years and is located in a prime area where large land parcels are extremely scarce. It offers a development potential of 1.6 million sq ft, according to a source familiar with the deal. While financial terms were not disclosed, experts estimate that an acre of land at Perungudi would cost around ?54 crore for an outright purchase at current market rates.

The developer plans to construct a Grade-A office complex alongside a 200-key hotel, strengthening its commercial and hospitality presence in Chennai, the source added.

Housing finance companies (HFCs) are facing significant pressure due to aggressive pricing of mortgage rates by public sector banks, with the rate war squeezing their margins. Despite reporting growth in loan disbursals, many HFCs are not seeing a proportional increase in their assets under management (AUM), largely because several borrowers are shifting their home loans to competitors. In the June 2025 quarter, Bajaj Housing Finance saw a 0.5% decline in net profit, while Aadhar Housing Finance and LIC Housing Finance reported 10% and 5% growth, respectively. Lower lending rates following the Reserve Bank of India's 100 basis points repo rate cut this year have brought down their net interest margins. Bajaj Housing Finance currently charges one of the lowest mortgage rates at 7.35%, according to its website. In comparison, public sector lender Canara Bank interest rate on home loans starts at 7.40%. The rate war is affecting even the largest housing finance company, LIC Housing Finance. Jain highlighted the disparity between disbursement and AUM growth amid pricing pressures. Bajaj Housing Finance reported a 22% increase in disbursements to ?14,651 crore in the first quarter. However, its AUM rose only 0.6% to ?5,736 crore from ?5,701 crore. This is because of very intense competition. 
 

In a move that could signal a shift toward higher interest rates in the home loan market, India's largest mortgage lender,  has increased home loan rates by 25 basis points for new borrowers. The hike primarily affects applicants with lower credit scores, as the bank has raised the upper band of its loan rates.some of the  also increased its rates, and other public sector lenders may follow suit. During the last fortnight of Julys mortgage rates ranged from 7.5% to 8.45%. After the revision, new borrowers will pay between 7.5% and 8.70%.some banks has raised its rate to 7.45%, up from 7.35% in late July. Both banks did not respond to emailed queries seeking an explanation for the rate hike. SBI has tweaked the rates based on CIBIL scores and the External Benchmark Lending Rate (EBLR). This is a low-yielding product for us, so we've decided to increase margins on new loans for borrowers with low credit scores. This change applies only to new customers and will not impact the ?8 lakh crore of outstanding loans," said a person familiar with the matter. Axis Bank, meanwhile, reported a year-on-year decline in home loan volumes, a segament it has struggled to grow for several quarters. Over the past four years, government-owned banks have steadily gained market share.
 

Over 9,000 individuals have been found to be fraudulently claiming Rs 1.20 lakh each under the Pradhan Mantri Awas Yojana, despite being homeowners themselves. Investigations have exposed the misuse of funds meant for the scheme, and authorities are now taking action to recover the availed subsidies. Similarly, pension fraud has also been exposed in various govt schemes, with over Rs 40 lakh lost due to fake claims, deceased beneficiaries, and unreported remarriages. Authorities admitted that the absence of recovery mechanisms hampers further action, underscoring a pressing need for policy reforms and stricter verification. Under the PMAY scheme, the govt provides Rs 1.20 lakh in three instalments to economically weaker families for constructing homes. However, a departmental survey conducted after disbursing the first instalment revealed that over 9,000 individuals across various villages had already built houses — some even double-storeyed. These beneficiaries submitted fake documents to claim the funds. In Shankargarh block alone, over 3,127 beneficiaries had not even laid a single brick after receiving the initial assistance. Upon verification with locals, it was confirmed that these individuals had no need for a new house. Authorities are now preparing to initiate recovery proceedings against them. Similarly, the Old Age Pension Scheme, which currently supports 1.53 lakh pensioners in the district, revealed that 2,351 beneficiaries had died a year ago, yet their families did not report the deaths, and the pensions continued to be credited. District social welfare officer Ram Shankar said that current rules do not allow recovery in such cases, limiting the department's ability to act. These revelations highlight serious loopholes in verification and recovery systems in welfare schemes and raise concerns about transparency and accountability in the distribution of public funds.