India's Real Estate Sector Poised for Diverse Growth in 2026

India’s real estate sector is set to enter 2026 with renewed momentum, supported by resilient domestic consumption, steady occupier demand, and sustained institutional investor confidence. After navigating global trade uncertainties and easing inflationary pressures in 2025, the market has emerged broader, deeper, and more institutionalised, with growth visible across commercial, residential, industrial, and alternative asset classes.

“Indian real estate is entering 2026 with stronger growth prospects and greater depth across asset classes. Elevated domestic consumption, sustained occupier activity, and rising investor confidence will continue to anchor demand. Commercial and residential growth is set to remain robust, driven by evolving workplace strategies, rising homeownership, and infrastructure-led connectivity enhancements. Industrial and warehousing demand will accelerate further as domestic manufacturing scales up and supply chains modernize,” said Badal Yagnik, Chief Executive Officer & Managing Director, Colliers India.

He added that alternative asset classes such as data centres, co-living, and senior living will attract greater institutional interest, while the expansion of REITs, SM-REITs, and InvITs, alongside a growing focus on sustainability and technology-led development, will reinforce India’s long-term real estate growth story.

Office leasing remained robust through 2025, crossing 50 million sq ft in the first nine months, driven largely by Global Capability Centres (GCCs), which accounted for nearly 40% of absorption. Demand was supported by evolving workplace strategies, diversification of the occupier base beyond technology, and a growing preference for Grade A, amenity-rich assets. With new supply expected at 55–60 million sq ft and vacancies largely range-bound, rentals firmed up by 5–10% year-on-year.

The momentum is expected to continue into 2026, with annual office demand stabilising at 70–75 million sq ft. GCCs are likely to remain the primary growth engine, expanding beyond IT into financial services, engineering, healthcare, and advanced analytics. Flex workspaces are set to become a structural component of occupier portfolios, accounting for nearly 20% of Grade A leasing, as companies adopt agile ‘Core + Flex’ models to manage costs and scale efficiently.

Sustainability and technology will increasingly define office development and leasing decisions. By 2026, nearly 80–90% of new supply is expected to be green-certified, while older buildings present a large retrofitting opportunity as occupiers gravitate towards ESG-compliant assets with higher energy efficiency and wellness standards.

Residential markets also held firm in 2025, aided by improved affordability, income growth, and infrastructure-led expansion of suburban and peripheral micro-markets. Housing sales across major cities are estimated at 0.3–0.4 million units, broadly in line with the previous year. Infrastructure upgrades such as metro extensions, expressways, and new airports expanded residential catchment areas, particularly near office hubs.

Looking ahead, residential demand is expected to remain steady in 2026, supported by urbanisation, favourable demographics, and rising aspirations. Developers are increasingly targeting Tier II and Tier III cities, while lifestyle-led preferences are driving demand for gated communities, plotted developments, villas, and premium apartments. “The outlook for 2026 points to a fundamental shift in real estate — from selling homes to delivering services and outcomes. Technology will increasingly be embedded within homes to proactively support health, safety, and longer healthspan. Real estate, especially in senior living, will evolve into an integrated ecosystem that enables independence, wellness, and quality of life rather than just ownership,” said Adarsh Narahari of Primus Senior Living.

India’s industrial and warehousing segment continued to outperform in 2025, with demand of 26.5 million sq ft in the first nine months, led by third-party logistics (3PL) players, e-commerce, and engineering firms. “Grade A space uptake remained strong despite global uncertainties, underpinned by supply chain modernisation and infrastructure improvements,” said N Amrutesh Reddy, Managing Director, NDR Warehousing.

In 2026, the segment is expected to clock average annual demand of 30–40 million sq ft, driven by policy-led manufacturing growth under initiatives such as Make in India, PLI, and Gati Shakti. The rise of plug-and-play industrial parks, larger-format warehouses, and hyperlocal fulfilment centres will reshape logistics real estate, while Tier II and Tier III cities are poised to emerge as key growth hubs along new freight and industrial corridors.

Alternative asset classes are moving firmly into the mainstream. India’s data centre market has more than doubled over the last five years to over 1,300 MW of capacity, driven by cloud adoption, AI workloads, data localisation norms, and digital consumption. Capacity is expected to scale further over the next few years, with operators expanding into edge data centres and smaller markets.

Shared living formats such as co-living and senior housing are also witnessing rising institutional interest. Demographic shifts, urban migration, and lifestyle changes are driving demand, while consolidation and formalisation are improving scale and operational efficiency. Tier II cities and spiritual hubs are emerging as new destinations for senior living, supported by infrastructure upgrades and growing NRI interest.

On the investment front, institutional inflows remained resilient in 2025, with investments estimated at around $6 billion for the year. Office and residential assets continued to dominate, while alternatives and mixed-use developments attracted increasing capital. In 2026, investments are expected to strengthen further to $6–7 billion, supported by deeper domestic participation, improving cross-border flows, and expanding REIT, SM-REIT, and InvIT platforms.

According to experts, as real estate ownership broadens and ESG integration deepens, India is positioning itself as a future-ready and globally competitive market.