India’s real estate sector crossed an important threshold in 2025. According to Knight Frank India’s annual review, the year marked a clear shift from post-pandemic recovery to a phase of structural transformation. Across residential, office, retail, logistics, warehousing and data centres, the market showed resilience and depth, backed by stable policies, strong end-user demand and steady economic growth.
What stood out was the quality of demand. Instead of short-term speculation, the sector was driven by financially secure buyers, long-term occupiers and institutional capital. This change has laid a stronger foundation for sustainable growth, rather than a boom-and-bust cycle.
Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India, summed it up by saying that the progress seen in 2025 is not cyclical but structural. According to him, better governance, maturing capital markets and growing confidence in India’s long-term economic direction are reshaping real estate. With India moving towards becoming a USD 1 trillion real estate economy by the end of the decade, the opportunities ahead are significant.
Residential market: Premium homes take centre stage
India’s housing market continued its upward trajectory in 2025, with premium and luxury homes emerging as the clear leaders. Homes priced above Rs 1 crore accounted for over half of all sales in major cities, highlighting a shift in buyer aspirations and affordability. End-users, rather than investors, drove demand, which helped the market stay resilient even as prices rose.
Cities such as Bengaluru, Hyderabad, Chennai and Delhi-NCR reported double-digit price growth. This was driven by a shortage of high-quality supply and strong confidence among buyers. Developers responded by focusing on premium projects that emphasised brand credibility, sustainability, privacy and smart-home features.
At the other end of the spectrum, affordable housing remained under pressure. Rising construction costs and limited access to financing constrained new supply, underlining the need for targeted policy support. Meanwhile, Tier-2 and Tier-3 cities continued to gain importance. Better infrastructure, rising incomes and proactive state policies helped these cities capture a growing share of housing demand, marking one of the most important shifts in India’s residential landscape.
Office market: Confidence returns, led by global firms
India’s office market delivered one of its strongest performances in recent years. Despite global economic uncertainty, demand from multinational companies, global capability centres (GCCs), technology firms and consulting businesses remained robust.
Gross office absorption is expected to cross 80 million square feet in 2025, reinforcing India’s position as a global hub for talent and enterprise. GCCs emerged as a major growth engine, strengthening India’s role in global business operations.
Flexible workspaces also saw record expansion. As hybrid work models stabilised, companies increasingly opted for agile and customised office solutions. India is now among the fastest-growing flexible workspace markets globally, with operators expanding into enterprise-focused offerings, managed offices and innovation hubs tailored to specific industries.
Retail, logistics and data centres: New-age assets gain ground
Retail real estate staged a strong comeback in 2025. High streets and shopping malls reinvented themselves by focusing on experiences rather than just transactions. Dining zones, entertainment hubs, wellness spaces and digitally enabled stores helped boost footfalls and spending.
At the same time, logistics, warehousing and data centres became mainstream investment categories. Growth in e-commerce, manufacturing reforms and India’s rapidly expanding digital economy pushed institutional investors to increase exposure to these segments. These assets are now seen as critical infrastructure supporting India’s consumption and technology story.
What to expect in 2026
Looking ahead, Knight Frank India expects demand for premium and luxury housing to remain strong, supported by rising incomes and deeper global integration of India’s economy. A possible reduction in interest rates could also revive demand from first-time homebuyers.
The office market is likely to maintain momentum, with GCCs and global firms continuing to expand. Flexible workspaces will evolve further, becoming more specialised and sector-focused. Tier-2 and Tier-3 cities are expected to play a bigger role in both residential and commercial real estate, driven by infrastructure rollout and economic decentralisation.
However, the affordable and mid-income housing segments will need focused policy support to bridge the widening gap between aspiration and affordability. Across all asset classes, trust will be the defining theme of the next growth phase, whether it is trust in governance, developer credibility, infrastructure delivery or institutional capital.
As 2026 approaches, India’s real estate story appears less about recovery and more about long-term confidence, built on solid fundamentals and changing consumer priorities.
