India's Real Estate Sector Booms with Strong Capital Market Deals and 30-Year High Housing Affordability
India's real estate sector has concluded with strong capital market performance, recording 11 deals worth ₹17,867 crore between April and December FY26, according to Equirus Capital. This activity matched the total deal count achieved in FY25, with potential to surpass six-year highs if momentum continues through the March quarter. The sector has simultaneously achieved its best housing affordability levels in three decades.
The real estate sector's fundraising activity demonstrates consistent investor confidence, with both deal volume and capital mobilization approaching record levels. Since FY18, the sector has cumulatively raised ₹72,331 crore from capital markets across different segments.
REITs have emerged as the dominant fundraising vehicle, accounting for the largest share of capital mobilization over the six-year period.
| Segment | Amount Raised (₹ crore) | Share of Total | |--------------------------|-------------------------|----------------| | Real Estate Investment Trusts | ₹31,241 | 43.2% | | Large-cap Developers | ₹20,437 | 28.3% | | Mid-cap Developers | ₹12,496 | 17.3% | | Small-cap Developers | ₹8,156 | 11.3% |
The sector has witnessed a dramatic improvement in housing affordability metrics across India. The property price-to-income ratio declined significantly to 3.3 in 2024, compared to 22 in 1995, representing the most favorable affordability conditions in nearly 30 years.
| Affordability Metric | 1995 | 2024 | Improvement | |--------------------------|------|------|-------------| | Price-to-Income Ratio | 22.0 | 3.3 | 85% decline |
This improvement stems from multiple factors including steady home loan rates, stable rental yields, and rising income levels. Equirus Capital expects the gap between home loan rates and rental yields to narrow further, potentially falling below 500 basis points in FY26.
Residential absorption patterns across top cities continue to demonstrate healthy demand-supply balance. Absorption rates have consistently matched or exceeded new supply, supporting developers' launch momentum while maintaining controlled inventory levels. This balance has created favorable conditions for sustained sector growth.
Robin Mangla, President at M3M India, noted that the performance reflected consolidation supported by macro stability and increasing homeownership demand. He highlighted that large infrastructure projects, including the Noida International Airport, could further boost residential demand and property valuations, particularly benefiting NCR markets such as Noida.
The sector's trajectory appears supported by broader infrastructure development initiatives. Major projects are expected to create additional demand drivers, particularly in key metropolitan regions. The combination of improved affordability metrics, sustained capital market interest, and infrastructure development positions the sector for continued momentum into FY26.
