India’s real estate sector is ending 2025 on a firm footing and is poised for sustained expansion in 2026, driven by resilient economic growth, easing inflation, lower interest rates and steady institutional investor participation, according to Colliers India’s report.
Despite global trade frictions that disrupted supply chains through parts of the year, domestic fundamentals remained supportive. Inflationary pressures eased gradually, benchmark lending rates declined by about 125 basis points during 2025, credit availability improved and equity markets showed traction. Together, these factors lifted consumer sentiment and supported consumption across sectors, including real estate.
Office, residential, industrial and emerging asset classes all recorded healthy activity in 2025, setting the stage for a more diversified and institutionalised growth cycle going into 2026, Colliers said.
“Indian real estate is entering 2026 with stronger growth prospects and greater depth across asset classes. Elevated domestic consumption, sustained occupier activity, and rising investor confidence will continue to anchor demand. Commercial and residential growth is set to remain robust, driven by evolving workplace strategies, rising homeownership, and infrastructure-led connectivity enhancements. Industrial & warehousing demand will accelerate further as domestic manufacturing scales up and supply chains modernize. At the same time, alternative asset classes, including data centers, co-living and senior living, will attract greater institutional interest amid demographic and digital shifts. Additionally, with expansion of REITs, SM-REITs & InvITs and a growing focus on quality, sustainability & technology-led development, 2026 is set to reinforce India’s position as a future-ready and globally competitive real estate market,” said Badal Yagnik, Chief Executive Officer, Colliers India.
Office market crosses key milestones
India’s office market remained one of the strongest pillars of the real estate cycle in 2025. Leasing activity crossed 50 million square feet in the first nine months of the year, marking an eight percent year-on-year increase. Global Capability Centres, or GCCs, accounted for nearly 40 percent of the total absorption, underlining India’s growing role as a strategic base for global corporations.
Demand was led by technology firms, BFSI players, engineering and manufacturing companies, healthcare and consulting firms, along with flexible workspace operators. Key markets included Bengaluru, Delhi NCR, Hyderabad, Mumbai, Pune, Chennai and Kolkata.
For the full year, Grade A office leasing is expected to approach 70 million square feet, while new supply is likely to close at 55–60 million square feet. Vacancy levels are expected to remain largely range-bound at a pan-India level, while rentals are projected to firm up by five to ten percent compared to 2024.
Looking ahead to 2026, Colliers expects office demand to stabilise at around 70–75 million square feet annually. GCCs will continue to drive high-value growth, expanding beyond technology into financial services, engineering, manufacturing and healthcare. GCC leasing alone is projected to reach 30–35 million square feet in 2026, accounting for 40–50 percent of total Grade A office demand.
Flexible workspaces are also becoming an integral part of occupier strategies. In 2026, flex spaces are expected to account for nearly 20 percent of Grade A leasing, supported by hybrid work models, cost optimisation and speed-to-market requirements. Flex stock is projected to reach 85–90 million square feet, with GCCs contributing a significant share of enterprise demand.
REITs, sustainability reshape commercial real estate
India’s commercial real estate market is also witnessing deeper institutionalisation through capital markets. Of the nearly 850 million square feet of Grade A office stock in the country, about 135 million square feet, or 16 percent, is already listed under REITs. With over 370 million square feet of stock having future REIT potential, penetration could rise to 20 percent in the coming years.
Sustainability is becoming central to occupier and investor decisions. By 2026, 80–90 percent of new office supply is expected to be green certified, pushing overall green penetration to 70–75 percent nationwide. Older office buildings, particularly those over a decade old, present significant retrofitting opportunities, estimated at over Rs 425 billion, as occupiers increasingly prioritise ESG-compliant, energy-efficient assets.
Residential demand remains steady
Housing sales across major cities remained stable in 2025 despite cost pressures from raw materials. Colliers expects residential sales of 0.3–0.4 million units for the year, in line with post-pandemic levels.
Lower home loan rates, rising average incomes and infrastructure-led connectivity improvements helped improve affordability. Suburban and peripheral micro-markets near office hubs benefited from new metro lines, expressways and arterial road projects.
In 2026, residential demand is expected to remain healthy, supported by urbanisation, India’s demographic profile and rising homeownership aspirations. Developers are increasingly focusing on lifestyle-driven offerings such as gated communities, plotted developments, villas, premium apartments and vacation homes. Sustainability is also influencing buyer preferences, with growing demand for green homes, energy-efficient materials and climate-resilient designs.
Redevelopment is set to reshape urban housing in cities such as Mumbai, Delhi NCR, Bengaluru, Chennai and Kolkata, supported by favourable FSI norms and transferable development rights. Beyond metros, Tier II and Tier III cities, including temple towns and spiritual hubs, are emerging as long-term growth markets, with price appreciation of 10–15 percent annually in select locations.
Industrial and warehousing see robust expansion
India’s industrial and warehousing segment continued its strong run in 2025. Demand across the top eight markets reached 26.5 million square feet in the first nine months, an 11 percent year-on-year increase. Third-party logistics players accounted for nearly one-third of the demand, followed by e-commerce, engineering and automobile firms.
Annual demand is expected to reach 30–40 million square feet, with new supply estimated at 35–40 million square feet. Grade A space uptake remained at an all-time high.
In 2026, growth is expected to accelerate further as manufacturing scales up under policy initiatives such as Make in India, the Production-Linked Incentive scheme and the Gati Shakti masterplan. Large warehousing deals of over 200,000 square feet are likely to account for 40–50 percent of Grade A demand. Tier II and Tier III cities are emerging as logistics hubs, aided by expressways, freight corridors and multi-modal logistics parks.
The rise of e-commerce and quick commerce is also driving demand for hyperlocal warehouses, dark stores and micro-fulfilment centres within cities.
Alternative assets gain prominence
Alternative asset classes are attracting growing investor interest. India’s data centre capacity crossed 1,300 MW in 2025, more than doubling over five years. Driven by AI adoption, cloud services, data localisation norms and digital consumption, capacity is expected to reach 2 GW in the next few years, with expansion into smaller markets and edge data centres.
Senior living and co-living segments are also expanding, supported by demographic shifts and changing lifestyles. Senior living is gaining traction in Tier II cities and spiritual destinations, while co-living is becoming more formalised, with organised inventory expected to double over the next two years.
Institutional investments to strengthen
Institutional investments in Indian real estate totalled $4.3 billion in the first nine months of 2025 and are projected to reach around $6 billion for the full year. Office and residential assets accounted for nearly 60 percent of inflows, while industrial, mixed-use and alternative assets saw rising allocations.
In 2026, investments are expected to increase to $6–7 billion, driven by both domestic and foreign capital. Expansion of REITs, SM-REITs, InvITs and AIFs is expected to deepen liquidity and broaden access to real estate assets.
With demand holding firm across asset classes and capital markets playing a larger role, Colliers believes India’s real estate sector is entering a more balanced, resilient and globally competitive phase of growth.
