The Indian real estate market has solidified its role as a fundamental driver of the nation's economic engine in 2025, demonstrating robust growth and attracting massive institutional confidence. As India ascends to become the world's fourth-largest economy this year, the property landscape is being reshaped by technological adoption, green mandates, and changing buyer preferences.
Record-Breaking Performance Across Segments
The sector's current contribution to the national GDP stands at a significant nearly 8%. It has drawn over $80 billion in institutional investments since 2010, with total credit exposure now exceeding a staggering ₹35 lakh crore, which represents about one-fifth of the country's total credit. This underscores deep-seated investor faith in its long-term potential.
The commercial office segment achieved a landmark, with Grade A and A+ office stock crossing the 1 billion square feet threshold by the third quarter of 2025. Transactions for the first nine months reached 62.3 million sq. ft., primarily fueled by Global Capability Centers (GCCs) and IT services. There is a clear occupier preference for ESG-compliant, wellness-oriented, and tech-integrated spaces.
On the residential front, while the number of launches (2,78,000 units) and sales (2,54,000 units) in the first half of 2025 saw a slight moderation compared to H1 2024, the market value told a different story. Overall sales value jumped by 9%, propelled by premiumisation. The average ticket size rose from INR 1.24 crore to INR 1.42 crore, with the Mumbai Metropolitan Region (MMR) and National Capital Region (NCR) accounting for nearly half of the total market value.
The industrial and warehousing sector witnessed explosive growth. Grade A/A+ supply in H1 2025 surged by 45% year-on-year to 27.9 million sq. ft., while absorption was even higher at 33.1 million sq. ft.. Third-party logistics (3PL) and manufacturing firms were the biggest demand drivers. India is poised to end 2025 with approximately 345 million sq. ft. of high-quality warehousing space.
Policy Reforms and Digital Leap Driving Efficiency
Government initiatives have been pivotal in creating a more transparent and efficient ecosystem. Key reforms include:
- Digitised registration and single-window approval systems.
- Unified RERA dashboards for greater accountability.
- Simplified compliance norms to reduce delays.
These measures have encouraged wider institutional participation. Concurrently, digital transformation, accelerated by 5G and AI, is revolutionizing processes through online discovery, e-KYC, blockchain-based title checks, and smart building management. Policies like Gati Shakti and the National Logistics Policy have further catalyzed growth in infrastructure-linked assets.
2026 Outlook: Affordability, Rentals, and New Frontiers
As the sector moves into 2026, several key trends are expected to dominate. Homebuyer preferences are shifting towards larger, hybrid-work-ready homes with EV charging, green certifications, and strong community features. Suburban markets will remain attractive due to improved connectivity and pricing.
However, rising construction and land costs may intensify affordability pressures, potentially boosting the rental and co-living segments. In the commercial space, the expansion of Real Estate Investment Trusts (REITs) is set to accelerate. Existing REITs manage about 130 million sq. ft. of office assets, a figure expected to nearly double in five years, with 85% of these buildings being green-certified.
Emerging asset classes are poised to attract significant capital. Data centres, in particular, will benefit from AI-driven demand and cloud adoption. Other growth areas include industrial parks, co-working, fractional ownership, and managed warehousing. The convergence of demand shifts, ongoing reforms, and strategic capital flows is set to make 2026 a pivotal year for Indian real estate, with sustainability, digitization, and affordability as the defining themes.
(Perspectives by Adarsh Ranka, Partner and Real Estate Sector Leader at an EY Global member firm, and Soumya Ranjan, Director, Strategy & Transactions at EY India.)
