India’s real estate sector continues to be on the upswing throughout 2025, supported by strong economic growth, heightened consumption levels, progressive government policies, and sustained investor confidence. Although global trade friction disrupted supply chains, the year also witnessed a gradual easing of inflationary pressures, improvements in credit accessibility, traction in equity markets and considerable reduction in benchmark lending rates, all of which boosted consumer sentiments and enhanced consumption across economic sectors including real estate. 

Against this backdrop, office space demand in 2025 remains upbeat as companies across Technology, Banking, Financial Services, and Insurance (BFSI), engineering & manufacturing domain and flex space operators continue to drive leasing activity across key markets, aided by evolving workplace strategies and a rising focus on high-quality, amenity-rich commercial developments. Housing sales also remain firm despite increasing cost pressures, supported by rise in average income levels, improving affordability, enhanced connectivity, and traction amongst homebuyers seeking lifestyle upgrades in gated communities. The industrial & warehousing segment, too remains upbeat in 2025, supported by logistics upgradation, modernization of local supply chains, and sustained Grade A space demand from Third-Party Logistics (3PL) players, and firms from segments such as engineering, e-commerce, automobile etc. At the same time, mixed use and alternative asset classes such as data centers, senior living, and co-living have witnessed rising participation from institutional investors, driven by robust demand, rapid digital adoption, demographic shifts, and evolving lifestyle needs. Overall, 2025 has been a year of sustained institutional investor participation, higher consumer confidence, and broader diversification led by expanding opportunities across Tier II/III cities of the country, setting the foundation for a more balanced real estate growth in the coming years.

Looking ahead in 2026, India’s real estate sector is set to continue its steadfast growth journey marked by institutionalization and diversification, supported by heightened consumption, steady occupier interest and uptick in investor confidence. Demand across both commercial and residential segments is expected to remain healthy, driven by evolving workplace models, rising homeownership, steady improvements in affordability and infrastructure-led connectivity enhancements. Industrial & warehousing and select alternative segments are also likely to gain further traction as domestic manufacturing expands, supply chains modernize, and demographic & digital shifts reshape real estate requirements. On the institutional investments front, investor participation is likely to stay strong amid democratization of real estate assets through Real Estate Investment Trusts (REITs), Small & Medium (SM) REITs, Infrastructure Investment Trust (InvITs), and innovative investment structures such as Alternate Investment Funds (AIFs). A greater push for Environmental, Social, and Governance (ESG) integration, and technology-adept built structures will guide long-term strategies, reinforcing India’s position as a future-ready, globally competitive real estate market.

OFFICE  

2025 round-up: Office demand remains strong across most Tier I markets

India’s office market demonstrated notable performance, crossing the 50 million sq ft leasing mark in the first nine months of 2025, an 8% YoY growth. Global Capability Centers (GCCs) drove nearly 40% of this uptake, underscoring their expanding role in Indian commercial real estate. Overall, the diversification of occupier base and increasing space uptake by both global corporates as well as domestic firms is likely to push Grade A office space demand close to 70 million sq ft by the end of the year. New supply is expected to close around 55-60 million sq ft, reinforcing India’s position as a major office market within the APAC region. Vacancy levels are likely to remain rangebound at the pan India level and rentals are likely to firm up by 5-10% as compared to 2024 levels.

2026 outlook: A shift towards agility and flight-to-quality

Building on the strong momentum seen in the past few years, demand is expected to scale up amid evolving occupier preferences in 2026. GCCs will drive leasing, expanding their footprint across major businesses and geographies while prioritizing flight-to-quality, tech-adoption and sustainability. Flexible workspaces will gain further prominence as occupiers embrace agile and ‘Core + Flex’ portfolios. Overall demand will continue to diversify beyond Technology, with BFSI, engineering & manufacturing, healthcare and consulting firms gaining further traction. Moreover, decentralized work models will accentuate real estate requirement in Tier II/III cities supported by cost arbitrage, availability of skilled talent and ongoing infrastructure developments. Overall, we anticipate annual office space demand to stabilize at around 70-75 million sq ft in 2026 and beyond.

• GCCs to drive high-value growth: In 2026 and beyond, GCCs in India will firmly establish themselves as strategic centers for research, product development, advanced analytics, artificial intelligence, and cloud technologies, supported by the country’s strong IT ecosystem and business-conducive government policies. GCC leasing is expected to reach 30-35 million sq ft in 2026, and account for 40-50% of the Grade A office space demand. Moreover, GCC demand is likely to become more broad-based and expand beyond technology firms, with notable surge in demand from global financial services, engineering & manufacturing and healthcare companies. 
• Flex spaces to become an unavoidable feature of occupier strategy: In 2026, flexible workspaces are expected to account for nearly 20% of Grade A leasing, driven by hybrid work models, cost optimization, and the need for speed-to-market solutions. With flex stock projected to reach 85-90 million sq ft in 2026, leading operators will continue to offer enterprise-grade and fully managed solutions that integrate technology, sustainability, and portfolio agility. Further, GCCs are set to deepen their flex space adoption, contributing 40-45% of the total enterprise demand of ~200,000 seats, as they prioritize scalable, highly customizable workplaces built to global standards. 
• REITs and IPOs to democratize commercial real estate: India’s office market is entering a new era of democratization driven by increasing number of equity market listings in the form of REITs, SM REITs and Initial Public Offerings (IPOs), especially by flex space operators. Interestingly, of the ~850 million sq ft of Grade A office stock in the country, around 135 million sq ft of assets are already listed under REITs, translating into a penetration of nearly 16%. With over 370 million sq ft of existing stock having a potential to be listed in future REITs and more office-specific-REITs being on the anvil, this penetration can touch 20% over the course of next few years—marking a steady shift in how commercial real estate is owned, managed and monetized in India. Concurrently, leading flex space operators are likely to expand their portfolios across Tier I & II cities, expediting their IPO plans in the next year. 
• Workspace design to seamlessly embed AI and PropTech: The design and functionality of new-age workspaces are being reimagined to enhance collaboration and employee experience using AI and PropTech. This trend is set to gain further prominence in 2026, with AI-led space planning and IoT sensors optimizing collaboration zones and energy efficiency. Predictive analytics will further support real-time fault detection and diagnostics, while automated HVAC, lighting and utilities will help reduce operational costs. Such adaptive workspaces integrating wellness features, ergonomic design, and biophilic elements will continue to boost productivity, well-being and become the cornerstone of future office spaces. 
• Retrofitting & green energy usage will become central in the ‘flight-to-quality’: Sustainability is becoming a defining feature of India’s office market, with green-certification now a mandatory requirement for most occupiers. Going ahead in 2026, 80–90% of the new supply is expected to be green certified, pushing overall green penetration to 70–75% at the India level.  ‘Flight-to-quality’ will gain more traction as occupiers prioritize premium, ESG-compliant assets with advanced energy efficiency and wellness standards.  In fact, older buildings (>10 years), totaling over 350 million sq ft, present retrofitting potential of more than INR 425 billion, which can ultimately ensure higher occupancy levels and rentals for developers and investors alike in the long-term. 

RESIDENTIAL

2025 round-up: Housing sales remain firm amid improving affordability 

During 2025, housing sales across major Indian cities continued to remain steady, led by consistent demand, favorable interest rates, and rise in average income levels. Despite persistent concerns around raw material cost pressures, GST rationalization of key construction materials has been welcomed by residential developers. Infrastructure augmentation in Tier I markets has further expanded residential catchment areas across suburban and peripheral localities, particularly which are in proximity to office hubs. Moreover, overall affordability levels have improved, given the steady rise in average income levels and 125 bps reduction in benchmark lending rates throughout 2025. Consequently, we expect housing sales to the tune of 0.3-0.4 million in 2025, at par with levels witnessed in the preceding year.

2026 Outlook: Residential market to capitalize on urbanization, premiumization and green living

Residential sales have improved in the post-pandemic era, reaching 0.3-0.4 million units annually, and the momentum is likely to continue in 2026 as well. Driven by rapid urbanization and impetus on infrastructure enhancement, leading residential developers are likely to expand their offerings across Tier II/III cities of the country. Moreover, the demographic advantage of India, with median age of around 30 years will continue to support housing demand, with developers catering to first-time homebuyers, and High-Net worth Individuals (HNIs) alike. Lifestyle focused preferences will further drive the demand for plotted developments, gated villas, upscale apartments, and vacation homes, while investors are likely to prioritize emerging micro-markets guided by long-term returns. Sustainability, meanwhile, will remain a defining theme, with green homes, energy-efficient construction materials, and net-zero, climate-resilient communities gaining inroads. 

• Lifestyle and sustainability led home buying preference to pick pace: Homebuyers in 2026 are likely to increasingly prioritize lifestyle and sustainability driven housing projects. Demand for plotted developments, gated-community villas, premium homes with concierge services, and vacation homes in offbeat locations will remain strong as buyers seek spacious, wellness-focused, and experiential living experiences. At the same time, the preference for green homes using smart technologies and energy-efficient materials is also likely to increase driven by government incentives and growing consumer awareness.
• Redevelopment projects to reshape urban skylines: India’s urban housing market is set to transform steadily as redevelopment initiatives gather speed across major cities such as Mumbai, Delhi NCR, Bengaluru, Chennai, Kolkata etc. Redevelopment of older and dilapidated buildings will be increasingly supported by favorable Floor Space Index (FSI) policies, Transferable Development Rights (TDR) frameworks, and revised urban planning guidelines. Close coordination between government bodies and private developers will be crucial in addressing redevelopment challenges and creating contemporary, resilient urban neighborhoods.
• Fringe localities to gain traction driven by infrastructure developments: Peripheral and suburban micro markets of most Tier I cities are anticipated to witness heightened residential activity in 2026, supported by ongoing infrastructure developments such as expressways, metro extensions, arterial corridors, and greenfield airports. These enhancements will unlock new residential pockets, improve accessibility, and stimulate housing demand across major transit corridors. Residential catchment areas in peripheral localities particularly will emerge as complementary growth centers, offering budget-friendly options across housing segments.
• Leading developers to increasingly foray into untapped Tier II/III markets: Beyond the established markets, Tier II & III cities, including spiritual hubs & temple towns are set for long-term growth, driven by urbanization, favorable demographics, and infrastructure upgrades. Demand traction and preference for premium product offerings will push property prices in these smaller cities up by 10-15% annually, supported by better infrastructure and targeted expansion by reputed developers.
• Fractional ownership poised to broaden access in premium housing: Investors are expected to increasingly adopt fractional ownership as a strategy to enter residential real estate at relatively lower price points. This model allows multiple stakeholders to co-own premium assets such as luxury homes, vacation properties and high-end condominiums, bringing greater flexibility, liquidity, and passive income opportunities. However, its continued growth will depend upon factors including clear regulations and a strong digital infrastructure to ensure transparency in transactions, bringing in trust in shared ownership.

INDUSTRIAL & WAREHOUSING 

2025 round-up: Robust demand and steady supply reinforce vitality

India’s industrial & warehousing market remained resilient, with cumulative demand across the top eight markets reaching 26.5 million sq ft in first 9 months of the year, reflecting an 11% YoY increase. Grade A space uptake stayed at an all-time high, even as global occupiers remained cautious amid ongoing trade uncertainties. Third-party logistics (3PL) players have continued to dominate leasing activity, accounting for nearly one-third of the warehousing demand. Simultaneously, e-commerce and engineering players have seen a surge in demand during this period, and this can potentially result in an annual demand of 30-40 million sq ft. New supply is also likely to remain elevated at 35–40 million sq ft in 2025.

2026 Outlook: Policy push and modernization to drive growth in emerging markets

India’s industrial & warehousing segment is poised for another year of strong expansionary growth in 2026, as 3PL players accelerate Grade A space demand across Tier I cities and emerging hubs. The continued rise of e-commerce and q-commerce will fuel the proliferation of hyperlocal facilities such as micro-fulfilment centers, dark stores, and in-city warehouses, enabling faster and agile deliveries. Additionally, rising traction in Tier II & III cities will be supported by enhanced regional connectivity through expressways, dedicated freight corridors, industrial corridors, and upcoming Multi-Modal Logistics Parks (MMLPs), that would further expand the country’s logistics capabilities. Overall, the industrial & warehousing segment is likely to see about 30–40 million sq ft of average annual demand over the next few years.

• Rise of plug-and-play parks to fast-track occupier expansion: Plug-and-play industrial hubs are becoming the go-to option for occupiers seeking faster setup and minimal groundwork. With utilities, core infrastructure and compliance-ready units already in place, these parks enable businesses to ramp up operations rapidly. Additionally flexible layouts, integrated support services and ability to reduce time-to-market will continue to make these facilities a strategic fit for scalable growth in 2026.
• Policy led manufacturing push to catalyze large space uptake: Strong policy push and better implementation of flagship programs such as Make in India, the Production-Linked Incentives (PLI) scheme, and Gati Shakti masterplan, are likely to accelerate India’s transformation into a competitive manufacturing hub. This policy momentum stands to benefit occupiers, enabling them to expand at scale —Warehousing deals of 200,000 sq ft or more will drive around 40-50% of the Grade A space uptake in 2026. Backed by improving infrastructure, enhanced connectivity and regulatory incentives, 3PL, engineering, and automobile occupiers are particularly expected to opt for larger, future-ready warehouses across key logistics corridors of the country.
• Logistics hubs in Tier II/III cities poised to emerge as key growth engines: As India’s infrastructure network continues to expand through new expressways, dedicated freight & industrial corridors and Multi-Modal Logistics Parks, industrial activity will increasingly extend beyond established Tier I cities. While leading markets will still command a significant share of demand and supply, Tier II & III cities are expected to gain far greater prominence in 2026 as enhanced connectivity and logistics efficiency open new avenues for regional growth. Rising freight movement along key infrastructure corridors will spur demand for modern warehouses, logistics parks, and manufacturing facilities across the country.
• Hyperlocal distribution models to amplify warehousing requirements: The surge in e-commerce and rapid-delivery platforms will accelerate the need for compact, neighborhood-centric storage solutions. Retailers and logistics operators are expected to expand their footprint in localities closer to high-demand neighborhoods to ensure faster delivery timelines. At the same time, dark stores built specifically for quick pick-up & dispatch, will play a pivotal role in optimizing last-mile efficiencies throughout 2026. These shifts will reshape urban supply chains, prompting greater investment in localized warehousing formats and agile fulfilment centers.
• Traction in EV sales and ancillary industries catalyze demand: As EV manufacturing ramps up, requirements for specialized facilities like battery storage, component manufacturing, electronics, and service logistics will intensify, thereby contributing significantly to the annual warehousing demand over the next few years. 
• Institutional grade assets to pave the way for future REITs: In 2026, the demand for ESG compliant and technology adept Grade A warehouses & logistics parks is set to rise further. With developers adopting global standards in design, sustainability, and automation, the segment is expected to draw deeper institutional capital and accelerate the inclusion of premium warehouses in future REITs/InvITs.

ALTERNATIVES

2025 round-up: Data centers and shared living formats gain prominence

Alternative asset classes such as Data Centers (DC), senior living, co-living etc. continued to expand in India, amid compelling growth prospects. As of 2025, the country’s DC market has significantly scaled up to more than 1,300 MW capacity entailing a real estate footprint of nearly 16 million sq ft across the top seven markets (more than 2X growth in last five years). This growth is being propelled by surging demand for cloud and digital services, accelerated adoption of AI and IoT, deeper internet penetration, regulatory push and stricter data localization norms. Alongside the digital push, shared living formats such as senior and co-living too have seen an upward growth trajectory led by demographic shifts and changing lifestyle preferences. As of 2025, co-living and senior living inventory has reached 0.3 and 0.03 million beds, translating into a penetration rate of 5% and 2% respectively, albeit at nascent levels.

2026 outlook: Alternative assets to enter accelerated growth phase 

Looking ahead to 2026, alternative asset classes such as data centers, senior living, and co-living are poised for sustained momentum as investors seek diversification and enhanced risk-adjusted returns. With India’s real estate market maturing across asset classes, capital allocation towards these emerging segments is expected to rise further. This trend signals a structural rebalancing of investor portfolios, positioning alternative assets as strategic growth engines of the future.

Data centers

• Capacity surge to be driven by increased AI adoption: AI & cloud computation are redefining the DC ecosystem of India supported by strong government initiatives and growing traction in machine learning and cloud-based services. With the AI market projected to reach USD 17 billion by 2030, the demand for high-performance DC infrastructure is set to gain traction in next few years. DC operators are likely to focus more on AI-powered, built-to-suit and controlled colocation models to ensure data security, regulatory compliance, and low-latency processing. As these trends converge, India’s overall DC capacity is expected to rise to 2 GW in the next few years, expanding into smaller markets driven by rapid digitalization, e-commerce penetration, and state-specific data center policies.
• Edge data centers to witness strong growth: In the coming years, growing emphasis on edge computing and increasing 5G roll-out will accelerate development of edge data centers. Leading operators have already announced plans to expand edge DCs across 200+ locations in the next few years. Moreover, as data consumption continues to grow manifold, energy efficiency, sustainability and carbon emissions are likely to become focal considerations in the Indian DC market.

Senior living

• Rising demand in Tier II cities and spiritual hubs: Apart from Tier I cities, senior living is set to gain traction in Tier II cities such as Surat, Coimbatore, Kochi & Panaji and spiritual tourism destinations like Vrindavan, Ayodhya, Dwarka & Rameshwaram driven by expansion of reputed developers, improving infrastructure and inclination towards slower pace of life and cultural experiences. 
• Increasing interest amongst Non-Resident Indians: NRIs are showing growing interest in senior living projects, particularly in hubs like Kerala, Delhi NCR, Bengaluru, and Hyderabad viewing them as safe, community-driven options for ageing parents. Additionally, institutional investors are recognizing the untapped potential in the segment, which will alleviate supply-side constraints to a certain extent in the upcoming years.

Co-living

• Market consolidation, formalization & expansion beyond Tier I cities: India’s co-living segment is entering a new phase of growth, underpinned by urban migration, rising disposable incomes, and demand for hassle-free, community-driven housing among students and young professionals. In the next 1-2 years, the segment’s organized inventory is likely to double up, improving penetration from 5% to 8-10%. While Tier I cities will remain the primary market, operators will increasingly foray into Tier II cities through acquisition of unorganized players, Purpose-Built Student Accommodation (PBSA) and partnerships with educational institutions. As co-living gets formalized to a greater degree in India, efficiencies, occupancy levels and profitability margins are likely to improve significantly in the coming years.
• Smart solutions & asset-light strategies to power operator expansion: The segment’s next phase of growth will be powered by asset-light strategies and technology-driven experiences such as keyless entry, app-based management, and IoT-enabled services. While lease models will dominate the co-living segment, franchise & revenue-sharing models will also gain traction in 2026, enabling faster expansion through local partnerships particularly in Tier II/III cities. 

INVESTMENT

2025 round-up: Investor confidence remains upbeat in Indian real estate

Institutional investments in India’s real estate sector held firm in 2025 despite global headwinds and trade frictions, totaling USD 4.3 billion in the first nine months. The ongoing year reiterates growing depth and confidence among domestic investors. Moreover, capital deployment by both foreign and domestic investors is likely to remain at par in 2025. Altogether, investment volumes for 2025 are projected to be at around USD 6 billion, a testament to the market’s depth and stability. Office and residential segments will continue to dominate, contributing nearly 60% of total investments, supported by strong occupier activity and a healthy supply pipeline. Additionally, alternative and mixed-use assets are likely to witness significant capital allocation, together accounting for more than one-fifth of the inflows in the year.

2026 outlook: Investors can potentially drive greater institutionalization across asset classes

Institutional investments in Indian real estate are expected to strengthen at USD 6-7 billion in 2026, driven by a balanced interplay of foreign and domestic investors. While domestic investors will continue to expand their investment horizon, foreign inflows are expected to improve as cross-border investments pick pace. Core assets such as office and residential will remain dominant and will be complemented by uptick in investments across industrial & warehousing, alternatives and mixed-use developments. In 2026 and beyond, Indian real estate is set to enter a deeper phase of institutionalization, marked by platform-led acquisitions, strategic consolidations and expansion of REITs & SM-REITs. Furthermore, AIFs can gain traction and enhance liquidity, particularly in stressed assets. Overall, ESG compliance and sustainability-linked investments will remain central to capital allocation strategies, reinforcing India’s position as a high-potential market in the APAC region.

• Cross-border capital deployment in land & developmental assets to rise: Institutional investors in Indian real estate are pivoting towards build-to-core strategies, wherein assets are developed with a long-term intent of holding, rather than exiting. Global investors are likely to increasingly form joint ventures and participate in early-stage activities such as land acquisition and construction, particularly in quality office, residential and industrial & warehousing segments where demand fundamentals remain strong. 
• Investments in retail & mixed-use segments to rise: Retail segment investments are set to rise in 2026, driven by Grade A malls with strong tenant mix, experiential formats, premium F&B outlets and entertainment zones. Mixed-use developments—combining retail, office, and hospitality spaces too will gain traction as developers and investors seek to maximize footfall, diversify income streams, and create integrated lifestyle destinations. Sustainability initiatives and tech-enabled ‘phygital’ experiences will further solidify global investor interest in the segment. 
• Capital flows broadening towards emerging markets & multi-city portfolios: Institutional investors are expected to increase their focus on geographical diversification in the coming years. Building upon the momentum seen in recent years, multi-city deals are likely to account for 30-40% of the total inflows in 2026. While Tier I cities will continue to dominate real estate investments, emerging Tier II/III markets can witness greater capital deployment across flexible workspaces, co-living accommodation, senior housing, mixed-use developments, data centers etc. 
• Building resilient portfolios through alternate strategies: Developers are likely to increasingly review their credit strategies and leverage structured debt and mezzanine finance products in the next few years. Debt platforms and private credit solutions can enhance liquidity and help in repositioning underperforming assets through ESG upgrades and adaptive reuse. These approaches signal a strategic pivot towards capital-efficient models that balance risks with value creation, ensuring real estate portfolios remain resilient and future-ready.
• Real estate filings and equity market listings to pick up: Real estate IPOs are expected to remain steadfast in 2026, building on the strong momentum of recent years. In the last 5 years, nearly 40 real estate IPOs have cumulatively raised more than INR 500 billion, with 2025 alone contributing nearly INR 180 billion, 30% up from the levels seen last year. Looking ahead, 2026 is likely to witness equally strong equity market listings from residential developers, housing finance companies, REITs, along with emerging categories like flex space operators and hospitality players as they scale operations and seek access to public markets.