To a large degree, India is experiencing the sort of real estate boom common to big, emerging economies. When Japan’s economy was soaring in the 1980s, prices in Tokyo were so frothy that the 845-acre compound of the Imperial Palace was valued at more than all the real estate in California. More recently, China has seen a boom, with real estate values rising in some cities by 500 percent.

But the spike in New Delhi is also being fueled by ego, status and some unique distortions in India’s economy. Few properties come available in the leafiest, most prestigious section of the capital, known as Lutyens’ Delhi, because the area is mostly dedicated to government housing. Powerful government ministers live in British-era bungalows with stately lawns of several acres, while lesser officials are eligible for different categories of government housing in an oasis largely separated from the rest of the chaotic capital, where many people live crowded into slums or shanties.

“This is the best part of Delhi, the core of Delhi,” said Munish Kumar Garg, who oversees the allocation of government housing. “If these properties in Lutyens’ Delhi were put on sale, there would be a queue two kilometers long.”

Mr. Garg, the director of the government’s Directorate of Estates, controls one of the more valuable residential real estate portfolios in the world. Asked how many New Delhi properties fell under his agency, he shrugged. “It would be difficult to know,” he said. “Maybe 10,000.”

It was a British architect, Edwin Lutyens, who in the early 1900s designed what is now the governmental heart of the capital. Beyond the grand buildings erected as the seat of British imperial power, Mr. Lutyens and other architects also built a residential bungalow zone of whitewashed single-story homes surrounded by verdant gardens. When India won its independence in 1947, the British moved out of many of the houses and the Indians moved in.

Today, power in Delhi can be measured by where a politician lives. The Directorate of Estates divides properties into eight categories, with Category 8 bungalows, the most exclusive, reserved for ministers and other top leaders. Former prime ministers and presidents, and their spouses, are allowed to remain in Category 8 housing until death.