REALTY+ OUTLOOK 2026: INDIA’S REAL ESTATE RESET

Over the past year, our interactions with various real estate leaders have made one thing crystal clear - India’s real estate sector is transitioning from a period of recovery into a phase of structural maturity. Infrastructure-led growth, regulatory reforms focused disciplined execution and market demand for quality product have been the defining features of year 2025. The year also marked a phase of consolidation and end-user driven housing markets across the country. A key driver of the renewed momentum in 2025 was the accommodative monetary environment. The Reserve Bank of India’s cumulative rate cuts of 125 basis points, bringing the repo rate to 5.25% by December 2025, translated into lower home-loan interest rates. This improved affordability & enhanced loan eligibility, accelerated buyers’ property purchase decisions and for developers, lower borrowing costs supported smoother execution cycles and greater confidence in advancing project pipelines. Policy-level measures further strengthening the sector included rationalization of GST on construction inputs that helped improve project viability. Combined with more organized supply environment, tech-enabled ecosystem and improving buyer confidence, points to a balanced and value oriented growth in 2026. So, after a year of playing on the back foot, think of 2026 as the powerplay—conditions are read, risks are calculated, and scoring will accelerate.

Key Trends Shaping Real Estate in 2026

Infrastructure as Value Driver: Proximity to large scale infrastructure projects, such as airports, metro lines and industrial corridors, has become the primary determinant of property value, which will continue in coming years. Premiumization & Luxury Dominance: High-net worth and NRI buyers drove demand for branded residences and luxury homes in 2025. In next year too, high-quality projects are expected to continue to surpass general market trends. Growth Beyond Metros: Tier-II and Tier-III cities, including spiritual and tourism hubs are emerging as significant growth engines due to improved connectivity and lower entry costs and this market shift will become more prominent in coming years. Redevelopment Focus: In land-scarce metros, redevelopment has overtaken new greenfield launches in 2025. Going forward, this practical route for urban renewal will gather more steam with government led initiatives.

Realty+ Perspective: Will 2026 Be A Big Deal

Let us start by quoting Goldman Sachs, “India will remain one of the most significant drivers of global growth among emerging markets. By 2026, India’s real GDP growth is expected to reach 6.7%.” The significance of 2026 lies in not a single event but, a number of gradual shifts that have begun to converge at scale for a long-term on-ground impact. From India taking giant strides in positioning itself as a global manufacturing hub through a production-linked incentives to infrastructure investments and economic policy reforms, the strategic moves by the government have set the stage for 2026.


For the real estate sector, 2026 will prove to be a year of “reset” – housing segment will be led by premium housing and selective price increases, commercial segment comprising office, logistics, data centers will gain momentum, inclining towards Grade-A and green properties and Tier II/III cities realty market will be fueled by institutional investment. We believe, infrastructure, quality, sustainability, and digitization will be the buzzwords of 2026. Challenges of affordability and housing shortage will get carried forward next year and overall real estate market will be characterized by resilience and diversification.

Realty+ Market Trends Interpretation

There is no sector that can stay untouched by global events. The ripple effects of happenings across the globe are felt by all the countries and the industries. Likewise, India’s real estate market performance in 2026 too will be significantly influenced by global landscape. From the Russia-Ukraine conflict to dollar-rupee f luctuations, Indian economy has been impacted by spikes in international commodity prices and Foreign Institutional Investor (FII) inflows. Geopolitical tensions have led to shortage of raw materials and intermediate goods for various industries as also affected export-oriented industries and IT sector. In 2025, real estate has experienced increased construction costs, decline in sales velocity and demand in the mid-segment housing market and dampened investor sentiment, specifically with multinational corporations & retailers putting expansion plans on hold, due to global uncertainties, a potential rise in vacancy levels in commercial properties.

In 2026, the new interpretation of these international trends will be evident in a more positive way. Global investors seeking diversification and growth amid uncertainties are favoring capital allocation in APAC region, with India as a prime beneficiary. Institutional investment in Indian real estate is expected to reach $6–7 billion in 2026. NRIs too are showing record interest in the Indian property market, drawn by favorable exchange rates, further boosting capital inflows and foreign exchange to India. On the other end, India’s China +1 strategy is boosting demand for industrial real estate India’s strong IT ecosystem positions it as a global hub for Global Capability Centres (GCCs).

2026 will reward discipline, scale, and execution-developers will need to focus on delivering the right product, in the right micro-market, at the right price, with credible t imelines.

Sector-Specific Outlook

Residential Segments: The sector is seeing a clear shift toward well-conceived, communities where strong design and open spaces across all housing segments. With housing inflation moderation and price growth stabilizing, affordability for mid-income buyers is set to improve. Demand for luxury housing is expected to strengthen further across Tier 1 and select Tier 2 cities. Commercial & Flex Spaces: Global Capability Centers are expected to drive office spaces demand up to 50%. The IT ITeS and BFSI sectors will also remain key contributors while, f lex space operators are anticipated to further consolidate their presence as occupiers. Leasing activity will be led by Bengaluru, Chennai, Hyderabad, Mumbai and Pune. Rentals are likely to firm up due to sustained demand and high quality supply additions. Retail & Hospitality: Retail will become more curated and experience focused. The hospitality segment is entering a more calibrated growth phase in 2026. Mixed-use formats, combining retail, hospitality, offices and living spaces are set to generate diversified income streams and extended footfall cycles. Alternative Assets: Strong institutional capital is flowing into data centers, warehousing, and senior living. Driven by “Make in India” and e-commerce, annual demand in industrial & warehousing is projected at 30–40 million sq.

f t. Data centres are expected to witness sustained investor interest. Student housing, co-living, senior living, and life sciences are expected to gradually gain traction, though from a relatively small base. Institutional Investments: Annual institutional investments are projected to remain firm at USD 5–7 billion in 2026 with REIT penetration expected to reach 20% of Grade A office stock. Private equity activity is expected to remain steady, with foreign institutional capital continuing to anchor investments. As we prepare to step into 2026, housing affordability continues to be under pressure and real estate market performance remains sensitive to Reserve Bank of India (RBI) rate cut decisions.

Challenges to Watch in 2026

In our extensive talks and discussions with the sectoral leaders, not headline risks, but structural pressure points were expressed as the definitive factors for the next phase of growth of the sector. Here are the key challenges Indian real estate must watch closely in 2026. Housing Affordability – Real estate companies are increasingly focusing on the premium and luxury homes due to higher profit margins, while the sales volume in the affordable and mid segment segment homes has contracted sharply - reflecting end-user fatigue in price-sensitive markets. Margin Compression – Project costs from construction materials to labour and compliance costs remain elevated, creating a marked challenge for developers in balancing profit margins and keeping prices competitive. Funding Crunch – While large, branded players enjoy easier access to capital, mid-sized and regional developers face selective and expensive funding. This capital disparity is creating an uneven playing field. Execution Risk – Real estate execution continues to face significant challenges due to lengthy and multi-layered approval processes and are one of the primary causes of stalled projects, f inancial stress for developers, and supply shortages. Demand Concentration – Real estate demand across segments is increasingly clustered around infrastructure-led corridors and proven micro-markets. Peripheral or poorly connected areas may see inventory overhang.

Regulatory Complexity – While RERA has improved transparency, multiple local, state and national level norms variations, land t itle and environmental clearances continue to add compliance complexity and time costs and project cash flows. Occupier Uncertainty – The office is shifting from a place of mandatory daily attendance making businesses rethink traditional central business district (CBD) locations. This is leading to a divergence in the market, prime, modern buildings are doing well but older, “commodity” buildings are struggling with high vacancy rates. Retail Struggle – E-commerce has significantly impacted traditional malls by offering convenience and competitive pricing, leading to a decline in footfall and the emergence of “ghost malls” Experience over square footage is dictating retail real estate. Pure retail spaces without experience are struggling to sustain footfalls. Sustainability Costs – Green construction and ESG reporting are no longer optional—especially for institutional capital—but they raise challenges of complex data collection & fragmentation, lack of standardized metrics, high initial costs & financing hurdles, evolving regulations, and a need for specialized skills, all while facing pressure from investors and stakeholders. Interest Rate Volatility – Interest rate volatility presents significant challenges for developers by directly impacting f inancing costs, project viability, and overall risk management. These fluctuations create an uncertain environment that demands flexible strategies and robust financial planning. Even modest rate fluctuations impact affordability and sentiment.

Realty+ Five-point Synopsis for Year 2026

1. Indian real estate is moving from simple expansion to purpose-driven evolution - integrated ecosystems, smarter last-mile connectivity and sustainable development.

2. Homebuyers seek more than just homes — they want a lifestyle that grows in long-term value. Mega townships will see leverage this year.

3. Real estate growth will be shaped by infrastructure projects with greenfield developments promising a transformative scale. Progressive government policies are going to drive large-scale redevelopment projects.

4. Data centres, senior living and co-living will attract diversified investments. Mixed-use, developments will shape customer-centric urban transformation across cities.

5. Overall, real estate will evolve through a powerful blend of sustainability & technology and simplified regulations and consistent financial eco-system.