India's Real Estate Sector Remains in Growth Cycle Despite July Dip
Despite a July slowdown in real estate launches, the sector remains in a growth cycle, according to Gulam Zia, Senior Executive Director at Knight Frank India. He attributes the dip to seasonal factors and expects festive demand to boost momentum.
Real EstateGrowth CycleKnight FrankGulam ZiaSeasonal BlipReal EstateAug 28, 2025
Overall, about 80% of the real estate sector is residential, with the rest being offices and retail. So far, the first three quarters have been pretty much equal to last year’s year-on-year numbers, so there is nothing to worry about, Zia told CNBC-TV18. He added, “Some say we are close to the 12 o’clock position on the property clock. But I don’t think we’re there yet—maybe at 11 o’clock. We need to pause, reflect, and watch the next couple of quarters.”
On the retail front, Zia said the segment has remained steady, though tier-2 and tier-3 cities face pressure from excess mall supply. “In Mumbai, Delhi, Bengaluru, seven to ten malls are doing fairly well, with two or three performing exceptionally well. But in smaller cities, having a third or fourth mall can be serious trouble.”
The office market, on the other hand, continues to perform strongly. Last year saw 70 million square feet of space absorbed, and this year is on track to reach 85 million. Rentals are also rising by 5–7% on average, with Bengaluru and Mumbai seeing double-digit growth. “So far, the office sector has not been affected by tariff wars or global uncertainty. For now, it is doing fabulously well,” Zia said.
In residential real estate, affordable housing remains undersupplied, while ultra-luxury properties face some stress. Homes priced below ₹50 lakh are selling out within two years, but projects in the ₹20–50 crore bracket could take up to five years to clear. Overall, unsold inventory remains healthy, with an average absorption period of 2.5 to 3 years.
Zia also noted that city-wise trends differ. While Mumbai’s July sales matched last year’s levels, Delhi and Bengaluru have been weak, whereas Chennai and Pune are showing strong growth.
On concerns around the July slowdown highlighted by Morgan Stanley, Zia dismissed them as temporary. “I would not be unduly worried, because in a few days we will be entering the shraadh paksha. This is the period when transactions typically take a backseat. Post that, during Dussehra and Diwali, we’ll see huge interest coming back. This is just a temporary blip, nothing more than that.”
Frequently Asked Questions
What is the current status of India's real estate sector?
India’s real estate sector remains in a growth cycle despite a July slowdown in launches, according to Gulam Zia, Senior Executive Director at Knight Frank India. The sector is performing well overall, with offices and retail showing resilience.
What is the main reason for the July slowdown in real estate launches?
The July slowdown is attributed to seasonal factors, particularly the shraadh paksha period, during which transactions typically slow down. This is expected to be a temporary blip.
How is the residential real estate market performing?
Residential real estate, which makes up about 80% of the sector, is performing well. Affordable housing is in high demand, while ultra-luxury properties face some stress. Unsold inventory remains healthy, with an average absorption period of 2.5 to 3 years.
What is the outlook for the office market in India?
The office market is performing strongly, with 70 million square feet of space absorbed last year and on track to reach 85 million this year. Rentals are rising by 5–7% on average, with Bengaluru and Mumbai seeing double-digit growth.
How are tier-2 and tier-3 cities faring in the retail segment?
Tier-2 and tier-3 cities face pressure from excess mall supply. While major cities like Mumbai, Delhi, and Bengaluru have several malls performing well, smaller cities struggle with the presence of too many malls.
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