India's Real Estate Outlook for 2025: Hybrid Work, Phygital Retail, and Sustainable Growth

Explore the evolving dynamics of India's real estate market, including hybrid work trends, phygital retail, and sustainable urban development, as the country charts a path towards a resilient and inclusive economic future.

Real EstateHybrid WorkPhygital RetailSustainable GrowthTier 2 CitiesReal Estate NewsJul 16, 2025

India's Real Estate Outlook for 2025: Hybrid Work, Phygital Retail, and Sustainable Growth

Real Estate News:2025 finds India firmly on a path of economic revival. The tangible facets of its economic revival are clear: evolving skylines, redesigned homes, sprawling logistics corridors, and hybrid retail models. Capital inflows into real estate reached a record USD 30 billion in 2024, while warehousing stock crossed 850 million sq. ft—a testament to growing institutional confidence and consumer demand.

As new work and consumption patterns shape urban geography, four interconnected dynamics are driving a polycentric, resilient growth story—redefining how India works, lives, and grows. Weaving data from the CBRE Report with on-the-ground insights from industry leaders can help explain the robust growth across India’s real estate sectors, how evolving market dynamics are fostering polycentric urban development, and chart a realistic roadmap towards sustainable, inclusive economic expansion.

Hybrid Work and Residential Reinvention

The hybrid work revolution has left a lasting impact on both commercial leasing and housing design. Leasing in peripheral business districts has risen nearly 12 per cent in 2025, with satellite hubs growing 18 per cent in demand—driven by companies seeking flexible space and proximity to emerging residential pockets. This can further rise in 2025.

Homebuyers are gravitating towards dual-use living environments that cater to work, wellness, and community. In fact, housing launches in suburban and Tier 2 regions surpassed metro markets for the first time, as consumers looked beyond square footage to consider layout efficiency, light, ventilation, and smart-home readiness.

“After COVID, buyers have become far more conscious about space and its versatility. Young professionals and families no longer just seek a roof over their heads. They want spaces that enable productivity and well-being,” says Jason Samuel, Director, House of Swamiraj.

This behavioural evolution is redefining how value is perceived in homeownership. “The shift towards ‘value-driven housing’ is one of the defining narratives of the post-COVID era. The result is housing that delivers higher long-term value, both in terms of quality of life and future resale potential,” Swamiraj adds.

Government reforms and incentives—ranging from RERA improvements to credit-linked subsidy schemes—have supported the rise in affordable housing launches. The integration of modular construction, green materials, and digital project tracking is also helping developers to lower costs and deliver faster.

“Suburban and peripheral areas’ demand for cost-conscious and mid-segment housing has been rising consistently, driven by infrastructure development, enhanced last-mile connectivity, and relatively smaller ticket sizes. Consumers today are value-conscious but will not compromise on quality,” says Vishal Raheja, Founder & MD, Investoxpert.com.

The momentum isn’t isolated to metros alone. “Over the last few years, we’ve seen that homebuyer behaviour has undergone a dramatic transformation. Non-metro buyers are no longer settling for basic features—gated complexes, integrated townships, and up-to-date facilities are what they demand,” Raheja emphasises.

In fact, lifestyle is increasingly guiding real estate investment decisions. “People are ready to commute a little away from the city centre if they have access to a better living space, parks, and community-oriented initiatives… real estate is still regarded as a secure, long-term investment, especially during market volatilities,” Raheja adds.

Phygital Commerce and Sustainable Supply Chains

Retail is increasingly ‘phygital’—a convergence of digital discovery and in-store experience. While metros continue to see mall revamps focused on entertainment, Tier 2 and 3 cities are leading the charge in omni-channel formats. Quick-commerce and e-grocery players are investing in hyperlocal fulfilment nodes to meet surging demand.

Logistics infrastructure is rapidly modernising to support this evolution. Institutional-grade warehousing has shown good growth in 2025, especially in cities like Bhubaneswar, Indore, and Coimbatore. Unified documentation portals and multimodal integration through Gati Shakti have reduced shipment delays and freight costs.

“We consider Tier 2 towns to be increasingly crucial. These cities are fast taking shape as centres of consumption and hubs for strategic manufacturing and supply chain operations,” says G Sivasailam, Director & CEO, Freudenberg India.

Underpinning these shifts is an accelerating commitment to sustainability. “Sustainability has always been integral to our global vision… Our solutions contribute significantly to India’s net zero aspirations and circular economy goals,” says Sivasailam.

This vision is being operationalised across logistics ecosystems. “As the country transitions towards electric vehicles, cleaner air, and energy efficiency, decentralised facilities offer an opportunity to embed sustainability straight into the production ecosystem,” Sivasailam asserts.

Polycentric Urban Growth and Investment Flows

Tier 2 and Tier 3 cities have emerged as the new engines of real estate and infrastructure development. From residential hubs like Greater Noida West and Guduvanchery to high-growth commercial corridors in Pune and Indore, regional urban centres are capturing investor and end-user attention alike.

“Cities and micro-markets that are job growth-led and infrastructure-driven will likely lead in 2025. NCR Delhi’s outskirts, peripheral Chennai, and Tier 2 cities such as Lucknow, Indore, and Ahmedabad are riding the growth wave,” says Raheja.

The polycentric growth model is fostering a more balanced and inclusive urban development, with a focus on sustainable practices and quality of life. As India continues to navigate the challenges and opportunities of the 21st century, the real estate sector is poised to play a pivotal role in shaping a resilient and prosperous future.

Frequently Asked Questions

What is the impact of hybrid work on real estate?

The hybrid work model has led to an increase in commercial leasing in peripheral business districts and a rise in demand for satellite hubs. Homebuyers are now seeking dual-use living environments that cater to work, wellness, and community, leading to a shift in housing design and location preferences.

How is the retail sector evolving in India?

Retail in India is becoming increasingly 'phygital', combining digital discovery with in-store experiences. Tier 2 and 3 cities are leading the charge in omni-channel formats, with quick-commerce and e-grocery players investing in hyperlocal fulfilment nodes to meet growing demand.

What role do Tier 2 and Tier 3 cities play in real estate growth?

Tier 2 and Tier 3 cities are emerging as new engines of real estate and infrastructure development. These cities are capturing investor and end-user attention due to their job growth, infrastructure development, and potential for sustainable and inclusive urban development.

What sustainability measures are being implemented in the logistics sector?

The logistics sector is implementing sustainability measures such as the use of electric vehicles, cleaner air initiatives, and energy efficiency practices. Decentralised facilities are being designed to embed sustainability into the production ecosystem, contributing to India’s net zero aspirations.

How is the government supporting the real estate market?

The government is supporting the real estate market through reforms and incentives, including improvements to RERA, credit-linked subsidy schemes, and the integration of modular construction, green materials, and digital project tracking to help developers lower costs and deliver faster.