INDIAN REAL ESTATE IN 2025: THE YEAR THE MARKET TURNED STRUCTURAL

“The RBI’s decision to cut the repo rate by 25 bps is a distinct pos itive for the Indian real estate sector as we close 2025… This rate cut is a distinct sentiment multiplier for year-end sales.” Anuj Puri, Chairman, ANAROCK Group

The closing weeks of 2025 found India’s real estate sector at a point few would have confidently predicted a decade ago. Not merely stable or recovering, the market appeared assured, self-aware, and increasingly institutional in character. The RBI’s latest rate cut served as a symbolic full stop to a year defined by momentum, consolidation, and a decisive shift from cyclical recovery to structural strength. Across residential, commercial, retail, logistics, and emerging asset classes, the sector demonstrated a depth that extended well beyond headline numbers. Price appreciation, infrastructure delivery, policy continuity, and end-user demand combined to create a year that will likely be remembered as a turning point rather than a peak.

FROM RECOVERY TO REINVENTION

Knight Frank India, in its annual assessment, described 2025 as a defining year that marked the transition from post-pandemic recovery to long-term transformation. This was not growth driven by speculation or easy liquidity, but by genuine demand, improved governance, and a maturing capital environment.

“The progress made in 2025 has reaffirmed our belief in the under lying strength of India’s real estate sector… What we are witnessing is not just a cyclical upswing, but a structural realign ment built on genuine demand, better governance, maturing capital, and a deepening trust in India’s long-term economic trajectory,” Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India

Residential markets across top cities continued to show resilience despite double-digit price growth. According to ANAROCK Research, average housing prices in the top seven cities rose by around 10 percent during the year. The RBI’s cumulative easing cycle helped cushion affordability pressures, especially in the mid-income and affordable segments, encouraging fence-sitters back into the market.

HOUSING DEMAND FINDS ITS CENTRE

CBRE’s data underlined the scale of activity underway. Between January and September 2025, both housing sales and new launches crossed 200,000 units, while luxury apartment sales surged 97 percent year-on-year in the same period. This was not confined to one geography. Infrastructure delivery played a catalytic role. In Gurugram, the completion of the Dwarka Expressway and Urban Extension Road II materially altered connectivity, accelerating absorption and strengthening buyer confidence. Developers noted a decisive shift in buyer behaviour toward trusted brands and delivery certainty.

“2025 was a year of sustained growth for Indian real estate, driven by strong housing absorp tion, firm pricing, and the delivery of major infrastructure projects across key metros… Demand re mained fundamentally end-user focused,” Gaurav Pandey, MD & CEO, Godrej Properties Ltd. This preference for organised players was echoed across markets, reinforcing a broader trend of consolidation.

THE RISE OF PREMIUM AND THE REWRITING OF VALUE

Luxury and premium housing emerged as the sector’s most visible growth engine. In Delhi NCR, nearly 42 percent of new supply fell within the luxury and ultra-luxury bracket, according to ANAROCK. Price appreciation in the region outpaced all other major cities.

“Delhi-NCR… recorded the highest housing price growth among the top seven Indian cities… with prices rising by around 24% year-on-year,” Ashok Kapur, Chairman, Krishna Group and Krisumi Corporation At the same time, buyer preferences evolved beyond size and location. Globally benchmarked design, curated experiences, and lifestyle-led developments increasingly shaped demand. “The increasing acceptance of landmark and branded residen tial developments… signals an evolution in buyer preferences toward globally benchmarked design, curated experiences, and premium living environments,” Robin Mangla, President, M3M India

CITIES, CORRIDORS, AND THE INFRASTRUCTURE EFFECT

Infrastructure expansion remained the sector’s most reliable growth multiplier. From expressways and metro networks to airports and industrial corridors, public investment translated directly into real estate confidence. Pune, often described as a balanced market rather than a boomtown, emerged as a standout. “Despite not being a port or capital city, Pune has emerged as one of the most dynamic real estate hotspots in the country,” Manish Jain, President, CREDAI Pune Similarly, Noida’s transformation gathered pace, supported by connectivity upgrades and the anticipation surrounding the Noida International Airport.

“With strong fundamentals in place… Noida is well-positioned to accelerate its market valuation and emerge as a leading growth engine for the NCR region,” Robin Mangla, President, M3M India

OFFICES, RETAIL, AND THE RETURN OF CONFIDENCE

Commercial real estate delivered steady performance through the year, supported by Global Capability Centres and flex space demand. “Demand for Grade-A office spac es will continue to be resilient… reaffirming India’s position as a global business hub,” Pavitra Shankar, MD, Brigade Enterprises Limited Retail, long considered the slowest to recover post pandemic, staged a strong comeback. “India’s retail real estate market is set to record its highest leas ing activity since the pandemic, reaching nearly 9 MSF in 2025,” Gautam Saraf, Executive Managing Director, Mumbai & New Business, Cushman & Wakefield New mall completions unlocked pent-up demand, while the format itself evolved toward experience-led destinations rather than pure consumption zones.

CAPITAL, CONSOLIDATION, AND INSTITUTIONAL MATURITY

Institutional capital remained a stabilising force, with investments estimated between USD 5–7 billion during the year. “2025… demonstrated remarkable stability and depth, strengthened by institutional investments,” Pavitra Shankar, MD, Brigade Enterprises Limited REITs, SM-REITs, and InvITs expanded the capital base, while stricter RERA enforcement and regulatory clarity improved investor confidence. “India’s real estate sector enters 2026 on a more mature footing, driven by premiumisation, institutional capital, and alignment with global demand,” Avneesh Sood, Director, Eros Group

TECHNOLOGY BECOMES CORE INFRASTRUCTURE

If infrastructure shaped demand, technology reshaped execution. Digital engineering moved from experimentation to standard practice. “In 2025, India’s construction and infrastructure sector crossed a defining threshold as digital engi neering moved from experimen tation to execution,” Pete Nicholson, Senior Vice President, Nemetschek Group AI, BIM, and digital twins enabled better coordination, risk reduction, and lifecycle predictability, while sustainability goals increasingly relied on early-stage digital modelling.

LOOKING AHEAD: 2026 AND BEYOND

As the sector steps into 2026, the consensus is cautious optimism rather than exuberance. Growth is expected to be broad-based, disciplined, and increasingly data driven. “Indian real estate is entering 2026 with stronger growth prospects and greater depth across asset classes,” Badal Yaknik, CEO, Colliers India At a macro level, the ambition is unmistakable. “India’s real estate sector is on a transformative trajectory—poised to grow from nearly USD 300 billion today to a USD 1 trillion industry by 2030,” Ashwinder R Singh, Chairman, CII NR Committee on Real Estate The story of 2025, then, is not one of excess or exuberance. It is a story of a sector finding its centre of gravity. Real estate in India no longer moves only with cycles. It now moves with institutions, infrastructure, and intent. 2025 was the year the sector found its footing. 2026 now promises to test how far it can go.

TRENDS SHAPING THE REAL ESTATE INDUSTRY

According to Grant Thornton Bharat report, trends that are defining the industry’s current landscape and future trajectory

1. Rise of low-density housing
The Indian real estate market is shifting towards low-density formats like villas, townhouses, and plotted developments. Homebuyers increasingly seek sustainable living options that offer isolation and harmony with nature, distancing themselves from urban noise and pollution. Developers are responding to this trend with open space-focused projects, while HNIs and ultra-HNIs are also showing a strong preference for premium, low-density projects.

2. Emergence of rental housing and co-living
Flexible living models are gaining ground, especially among younger professionals and migrant populations in urban centers. Co-living spaces and organised rental housing are expanding, driven by affordability pressures, lifestyle flexibility, and supportive policy frameworks like the Model Tenancy Act.

3. Technology integration
Technological integration is transforming the Indian real estate sector through AI and blockchain. It is also streamlining processes such as property transactions, legal verifications, and market analysis. Smart home features integrated with IoT are now standard, boosting energy efficiency and convenience. Digital tools are revolutionising how properties are bought, sold, experienced, and managed, enhancing transparency and user engagement.

4. ESG and green real estate mainstreaming
Sustainability imperatives are now central to real estate development. Institutional investors increasingly prefer ESG-compliant projects, while end users prioritise wellness, energy efficiency, and green certifications. Developers are embedding sustainable design and smart infrastructure as integral parts of new project offerings.

5. Increased preference for homeownership
Homeownership gained traction, supported by government incentives and hybrid work trends. The demand for larger homes in suburban and Tier 2 cities rose sharply. Changing demographics, a growing middle class and younger population entering the workforce have further fuelled demand. Emotional factors, such as the desire for asset creation and intergenerational wealth factors, further reinforced the cultural and economic shift towards owning homes.

6. Opportunities in REIT space
The REIT market in India now represents over 9% of the total office stock across the top eight cities, underpinned by substantial institutional investment. Key drivers of the REIT growth include rapid urbanisation, expanding infrastructure, supportive regulatory frameworks, and investor-friendly policies such as lower minimum investment thresholds and the introduction of fractional ownership through SM REITs. Rising awareness among retail investors and new avenues for participation are further strengthening liquidity and expanding the potential of this emerging segment.

7. Tokensiation of real estate
Tokenisation of real estate involves converting physical property assets into digital tokens on a blockchain, allowing fractional ownership and easier trading. In the Indian real estate industry, this innovation offers improved liquidity, better transparency, and broader investor participation, especially for retail investors. It enables people to invest smaller amounts in high-value properties, as well as tamper-proof transactions and real-time tracking of ownership. With appropriate regulatory support, tokenisation can revolutionise the Indian real estate market by making it more efficient, inclusive, and investor friendly, aligning with the government’s push toward digital transformation and financial inclusion

8. PropTech innovation - automation and robotics
Innovations such as artificial intelligence (AI), machine learning, and big data analytics, will revolutionise property valuations, market predictions, and personalised property offerings. The rise of smart homes, powered by the Internet of Things (IoT), will enhance energy efficiency, security, and convenience. Automation and robotics will redefine construction methods, increasing speed and reducing costs.

9. AI-driven sustainability
AI-driven sustainability will enable faster, more sustainable building techniques. Data-driven insights will become crucial for developers and investors, optimising property management, investment decisions, and customer engagement.

10. Virtual reality (VR) and augmented reality (AR)
VR and AR will enable immersive virtual tours, allowing potential buyers to explore properties remotely, transforming the home-buying process.


RESIDENTIAL REAL ESTATE MARKET: PREMIUM HOMES LEAD THE GROWTH STORY

Premiumisation strengthens as end-users take charge According to Knight Frank India, the residential real estate market maintained strong momentum, with premium and luxury housing emerging as the clear demand drivers. Homes priced above Rs. 1 crore accounted for more than half of total sales across major cities, reflecting a decisive shift in buyer aspirations, affordability and purchasing power. A key structural change has been the rise of financially secure buyers, who have replaced speculative investors as the primary force in the market. This has helped sustain demand even as prices climbed across leading metros. Cities such as Bengaluru, Hyderabad, Chennai and Delhi NCR recorded double-digit price appreciation, driven by limited availability of quality supply and strong buyer confidence. Developers have responded by sharpening their focus on premium housing, with greater emphasis on brand credibility, sustainability, privacy and advanced digital features. Sales remain firm, affordability improves Colliers India reports that housing sales across major cities remained stable through 2025, supported by steady demand, favourable interest rates and rising income levels. Despite ongoing concerns around raw material costs, developers welcomed the rationalisation of GST on key construction inputs, which offered some relief on margins. Infrastructure expansion in Tier I cities has widened residential catchment areas, particularly in suburban and peripheral locations close to office hubs. Affordability also improved during the year, aided by steady income growth and a cumulative 125 basis point reduction in benchmark lending rates.

OFFICE MARKET: A CONFIDENT REVIVAL POWERED BY GCCS AND FLEXIBLE WORKSPACES

A strong comeback despite global headwinds According to Knight Frank India, India’s office real estate market staged one of its strongest performances in recent years, defying global economic uncertainty. Demand from multinational corporations, Global Capability Centres (GCCs), technology firms, consulting companies and innovation-led enterprises remained resilient throughout the year. Gross office absorption is expected to cross 80 million sq. ft in 2025, reinforcing India’s position as a preferred global hub for talent, technology and enterprise. GCC expansion emerged as the single most powerful growth driver, strengthening India’s role in the global value chain as companies consolidated high-value functions in the country. Flexible workspaces also recorded record expansion. With hybrid work models stabilising, enterprises increasingly favoured agile and scalable formats. India is now among the world’s fastest-growing flexible office markets, prompting operators to broaden their offerings beyond traditional co working to include enterprise solutions, managed offices and sector-focused innovation hubs. Leasing momentum remains broad-based Colliers India reports that office leasing across Tier I markets remained robust in 2025, crossing 50 million sq. ft in the first nine months of the year, marking an 8 percent year-on-year increase. GCCs accounted for nearly 40 percent of this uptake, highlighting their expanding influence in India’s commercial real estate landscape. With a more diversified occupier base and rising demand from both global and domestic firms, Colliers expects Grade A office space absorption to approach 70 million sq. ft by the end of 2025. New supply is likely to close in the range of 55 to 60 million sq. ft, keeping vacancy levels largely stable at a pan-India level.

2026 outlook: Urbanisation, premium living and sustainability in focus

Colliers expects residential sales momentum to continue, driven by rapid urbanisation and sustained infrastructure investment. Large developers are likely to deepen their presence in Tier II and Tier III cities, expanding beyond traditional urban strongholds. India’s favourable demographics, with a median age of around 30 years, will continue to support housing demand across segments, from first-time buyers to HNIs. Lifestyle-led preferences are expected to accelerate demand for plotted developments, gated villas, premium apartments and vacation homes. Investors, meanwhile, are likely to target emerging micro markets offering long-term capital appreciation.

INDUSTRIAL & WAREHOUSING: THE QUIET POWERHOUSE OF 2025

Strong demand underpins market vitality in 2025 According to Colliers India, India’s industrial and warehousing sector continued to demonstrate resilience in 2025, supported by robust occupier demand and a steady supply pipeline. Cumulative leasing across the top eight markets reached 26.5 million sq. ft in the first nine months of the year, marking an 11 percent year-on-year increase. Notably, absorption of Grade A warehousing space remained at record levels, even as global occupiers adopted a cautious stance amid ongoing trade uncertainties. Third-party logistics (3PL) players remained the dominant demand drivers, accounting for nearly one-third of total leasing activity. E-commerce and engineering f irms also recorded a sharp uptick in space requirements, positioning the market for annual demand in the range of 30 to 40 million sq. ft.

2026 outlook: Agility, quality and decentralisation Colliers anticipates office demand to scale further as occupier strategies evolve. GCCs will continue to lead leasing activity, expanding across cities and business verticals while prioritising high-quality, technology-enabled and sustainable workplaces. Flexible workspaces are expected to gain deeper acceptance as companies adopt ‘Core + Flex’ portfolios to balance stability with agility. Demand is also set to broaden beyond the technology sector, with BFSI, engineering and manufacturing, healthcare and consulting firms playing a larger role. Decentralised work models will further boost office demand in Tier II and Tier III cities, supported by cost advantages, availability of skilled talent and ongoing infrastructure development. Annual office leasing is expected to stabilise at around 70 to 75 million sq. ft from 2026 onwards

DATA CENTRES: INDIA’S NEW INFRASTRUCTURE ASSET CLASS Data Centres:

AI, Cloud and Edge Computing Drive the Next Wave of Growth India’s data centre market is entering a phase of rapid expansion, powered by the growing adoption of artificial intelligence and cloud computing. AI and cloud-led workloads are reshaping the country’s digital infrastructure needs, supported by strong government initiatives and rising use of machine learning and cloud-based services across sectors. With India’s AI market projected to touch USD 17 billion by 2030, demand for high-performance data centre infrastructure is expected to accelerate over the next few years. To meet this demand, data centre operators are increasingly focusing on AI-ready, built-to-suit facilities and controlled colocation models. These formats allow greater control over data security, regulatory compliance and low-latency processing, which are becoming critical as enterprises handle larger volumes of sensitive and real t ime data.

EMERGING LIVING SEGMENTS: SENIOR LIVING AND CO-LIVING COME OF AGE

Senior living: Expanding beyond metros India’s senior living segment is witnessing growing traction beyond Tier I cities. According to industry assessments, demand is rising steadily in Tier II markets such as Surat, Coimbatore, Kochi and Panaji, as well as in spiritual and pilgrimage destinations including Vrindavan, Ayodhya, Dwarka and Rameshwaram. This shift is being driven by improving infrastructure, the entry of reputed developers and a growing preference among seniors for quieter environments that offer cultural depth and a slower pace of life. Interest from Non-Resident Indians is also increasing, particularly for projects located in states and cities such as Kerala, Delhi NCR, Bengaluru and Hyderabad. Many NRIs view senior living communities as secure, well-managed options for ageing parents, combining healthcare access with a sense of community. Co-living: Formalisation and expansion gather pace India’s co-living market is entering a phase of consolidation and structured growth, underpinned by continued urban migration, rising disposable incomes and demand for f lexible, hassle-free housing among students and young professionals. Over the next one to two years, the organised co-living inventory is expected to nearly double, improving market penetration from about 5 percent to an estimated 8–10 percent. While Tier I cities will continue to anchor demand, operators are increasingly looking beyond metros. Expansion into Tier II cities is expected through acquisitions of unorganised assets, the development of Purpose-Built Student Accommodation (PBSA), and partnerships with universities and educational institutions.

INVESTMENT: INSTITUTIONAL CAPITAL HOLDS FIRM, MARKET MOVES TOWARDS DEEPER MATURITY 2025

round-up: Investor confidence stays resilient Institutional investor sentiment in Indian real estate remained upbeat in 2025, even as global markets grappled with economic uncertainty and trade-related pressures. Total institutional investments touched USD 4.3 billion in the first nine months of the year, underlining the sector’s resilience and growing depth. Office and residential assets continued to attract the bulk of investor interest, together accounting for nearly 60 percent of total inflows, supported by strong occupier demand and a healthy development pipeline.

2026 outlook: Institutionalisation to deepen across asset classes Institutional investments in Indian real estate are expected to strengthen further, reaching USD 6 to 7 billion in 2026. Core segments such as office and residential will remain the primary focus, complemented by rising allocations to industrial and warehousing, alternative assets and mixed use developments. Experts note that Indian real estate is entering a more mature phase of institutionalisation, characterised by platform-led acquisitions, strategic consolidation and the continued expansion of REITs and SM-REITs.