India real estate: steady through 2025, setting up a broader 2026 upcycle
If 2024 was the year India’s property market reminded everyone it could run fast, 2025 has looked more like a controlled jog—still forward, still confident, but paced. And that pacing matters, because most credible 2026 outlooks aren’t calling for a “boom-bust” repeat. They’re pointing to solid, broad-based growth across residential, offices, industrial/warehousing and newer “alternative” assets—with capital markets (REITs/InvITs/AIFs) and sustainability becoming the glue that holds it all together.
The 2025 story: momentum that didn’t crack under pressure
What makes 2025 notable is not just demand—it’s resilience.
Multiple reports flag that India’s real estate activity stayed firm even as global uncertainty lingered, helped by a relatively supportive local backdrop: easing inflation conditions, improving loan access, and softer rate pressure compared to what buyers feared earlier.
But “steady” doesn’t mean “flat.” It means the market is maturing—more end-user driven in housing, more institutionally underwritten in commercial and logistics, and more selective about what gets built.
Segment-by-segment: what held steady in 2025, and why 2026 looks stronger
1) Offices: GCCs + flex + green buildings are shaping the next cycle
The office market is doing what India does best: turning global corporate caution into India expansion.
- A Colliers-linked view summarized by Business Today notes India crossed 50 million sq ft of office leasing in the first nine months of 2025, with Grade A demand projected near ~70 million sq ft by end-2025 and 2026 seen at ~70–75 million sq ft.
- JLL’s Q3 2025 read is even more specific on the engine: Jan–Sep 2025 gross leasing hit 56.5 million sq ft, and GCCs held a ~35.5% share of gross leasing (about 20 million sq ft in the first nine months). Vacancy tightened to ~15.7%, the lowest in 17 quarters, with rents rising across cities.
Why that matters for 2026: occupiers aren’t just leasing “any space.” They’re increasingly demanding tech-enabled, green-certified buildings and flexible portfolios (“Core + Flex”), which supports both rental growth and higher-quality new supply.
2) Residential: premium stays hot, affordability stays the big policy question
Housing in 2025 didn’t lose its base—it changed its shape.
- The same Colliers-linked summary highlights premium homes, plotted developments, and gated communities as key demand pockets, with developers pushing deeper into Tier II/III cities, and themes like redevelopment and fractional ownership gaining traction.
- A Grant Thornton realty report adds helpful texture: affordable housing has had mixed outcomes (for example, it cites Q1 2025 affordable sales down YoY, while unsold inventory reduced, suggesting absorption continued even as launches shifted). It also notes a broader developer tilt toward premium segments.
Why 2026 can still grow even if affordability is stressed: India’s housing demand is increasingly supported by a mix of income upgrades, connectivity/infrastructure, and preference for larger/better-quality homes—but a truly broad-based housing wave will need financing access and policy support to bring the affordable segment back into balance.
3) Industrial & warehousing: manufacturing + modern supply chains keep the flywheel turning
If offices are the “white-collar footprint,” logistics is the “real economy footprint”—and it’s expanding.
The Colliers-linked summary points to strong industrial/warehousing demand driven by e-commerce, logistics, engineering and automotive, with manufacturing growth and modern supply chains expected to add more fuel in 2026.
Translation for 2026: the more India invests in corridors, ports, highways, and “Make in India”-style supply chains, the more the country needs institutional-grade warehouses, last-mile hubs, and industrial parks—assets global capital is comfortable underwriting.
4) Data centres and other “alternatives”: the new mainstream
One of the clearest 2026 tells is that investor attention is expanding beyond the traditional “office-resi” duo.
- Business Today’s report summary flags rising interest in data centres, senior living, and co-living, plus mixed-use projects.
- Colliers leadership commentary also explicitly calls out data centres as a rising investment focus, tied to India’s expanding digital infrastructure and hyperscale demand.
Why 2026 could be a breakout for alternates: these assets are increasingly treated as infrastructure-adjacent real estate—with longer leases, specialized design, and clearer institutional underwriting (especially for data centres).
Capital flows: why 2026 confidence is building
A big reason reports keep using words like “stable” and “institutional” is the way money is behaving.
- In the first nine months of 2025, institutional investments totaled about USD 4.3B, and Colliers leadership indicated expectations of USD 5–7B annual investments in both 2025 and 2026, with office and residential comprising a large portion and industrial/logistics regaining momentum.
- The Business Today summary also points to growing use of REITs, SM REITs, InvITs and AIFs as channels that broaden participation and formalize the market.
What that implies: 2026 growth isn’t just about demand; it’s about market plumbing—better financial vehicles, more transparent assets, and a wider base of capital that can fund the next leg.
What could trip the market in 2026?
Even with a constructive outlook, the likely friction points are clear:
- Affordability and construction costs: If costs keep rising faster than incomes in key markets, mid and affordable segments can soften—even while premium stays resilient.
- Supply quality vs quantity: Demand is increasingly for better buildings—green, efficient, amenity-rich—not just more square feet. Developers who miss that shift could struggle even in a rising market.
- Execution and approvals: Real estate is still an execution business—timelines, compliance, and delivery discipline remain decisive.
The bottom line
2025 is shaping up as a “steady foundation year.” It kept demand intact across segments, tightened quality expectations, and drew in institutional capital. 2026 looks set to build on that base—with offices supported by GCCs and flex, housing led by premium and lifestyle formats (but needing affordability support), logistics riding manufacturing and supply-chain modernization, and data centres stepping into the spotlight.
Reviewed by Aparna Decors
on
December 16, 2025
Rating:
