India's Renewable Energy, Roads, and Real Estate Set to Receive ₹17.5 Trillion Investment by FY26-27
Crisil projects a significant increase in investments across India’s renewable energy, roads, and real estate sectors, driven by hybrid capacities, asset monetisation, and premiumisation.
Renewable EnergyRoadsReal EstateInvestmentCrisilReal EstateJun 09, 2025
Accelerated adoption of storage-linked capacities in the renewable energy sector, a sharper focus on monetisation in the roads sector, premiumisation in residential real estate, and the influx of global capability centres (GCCs) in commercial real estate are the primary drivers of this projected growth.
“What remains constant across these three sectors is strong investment growth. Over this fiscal and the next, investments may rise at 15 per cent annually, reaching ₹17.5 trillion compared with ₹13.3 trillion in the preceding two fiscals,” said Krishnan Sitaraman, chief ratings officer, Crisil Ratings. “While adapting to the new business dynamics will pose some challenges, credit profiles of Crisil-rated developers and projects would remain resilient.”
In the renewable energy sector, the shift towards hybrid or storage-backed capacities is gaining momentum. Of the 75 GW capacity expected to be added in FY26 and FY27, hybrids will account for 37 per cent—a significant increase from 14 per cent in FY24 and FY25. This transition is crucial for ensuring a stable and reliable energy supply.
The roads sector, which has a substantial multiplier effect on the economy, is poised for revitalisation through a pick-up in project awarding. For the National Highways Authority of India (NHAI) to return to its peak execution rate of 6,000 km per year, a substantial increase in private capital through accelerated asset monetisation will be essential.
Crisil expects the share of monetisation in NHAI’s funding to grow to 18 per cent in FY26 and FY27, up from 14 per cent in FY24 and FY25. The monetisable asset base is currently estimated at ₹3.5–4 trillion. This increase in monetisation is crucial for reducing the financial burden on the government and attracting more private investment.
In residential real estate, demand is stabilising after the rapid post-pandemic recovery. Developer revenue growth is expected to remain steady at 10–12 per cent in FY26–FY27. While volume growth may rationalise, realisations will continue to be supported by demand for premium projects. This trend of premiumisation is expected to drive the market forward, despite potential inventory challenges.
Commercial real estate is also set to see steady net leasing growth of 7–9 per cent in FY26–FY27. With India continuing to remain a cost-efficient destination for GCCs, and with domestic sectors growing steadily, annual net leasing demand is expected to exceed 50 million sq ft by FY27. This growth is driven by the increasing presence of international companies and the expansion of domestic businesses.
As these sectors transition to a new normal, they face evolving challenges. In renewables, timely availability of evacuation infrastructure is critical. Since renewable capacities typically take much less time to set up, temporary transmission bottlenecks could emerge. This could impact the efficiency and reliability of the energy supply.
In the roads sector, monetisation has been uneven, with around 35 per cent of toll-operate-transfer bundles floated in the past not receiving bids. Delays in approvals or mismatches in valuation could further slow sectoral growth. Ensuring a transparent and efficient bidding process is crucial for the success of these projects.
In residential real estate, new launches outpacing demand could push up inventory. Inventory levels are expected to rise to 2.9–3.1 years in FY26 from a low of 2.7 years in FY24, which could increase debt levels for some developers. Managing inventory levels and aligning new launches with market demand will be key to maintaining financial stability.
For all three sectors, geopolitical risks and their impact on capital flows into India will bear watching. While such risks may pose challenges, Crisil expects credit risk profiles to remain resilient across renewables, roads, and real estate. This resilience is underpinned by strong investment growth and a focus on sustainable development.
Frequently Asked Questions
What is the projected investment in India’s renewable energy, roads, and real estate sectors over FY26 and FY27?
The projected investment in these sectors is estimated to reach ₹17.5 trillion over FY26 and FY27, up from ₹13.3 trillion in FY24 and FY25.
What are the key drivers of growth in the renewable energy sector?
The key drivers include the accelerated adoption of storage-linked capacities and the shift towards hybrid or storage-backed capacities.
How is the National Highways Authority of India (NHAI) planning to increase private capital through asset monetisation?
NHAI plans to increase private capital through accelerated asset monetisation to return to its peak execution rate of 6,000 km per year.
What is the expected trend in residential real estate demand and developer revenue growth?
Demand is stabilising after the post-pandemic recovery, and developer revenue growth is expected to remain steady at 10–12 per cent in FY26–FY27.
What challenges are these sectors facing as they transition to a new normal?
Challenges include timely availability of evacuation infrastructure in renewables, uneven monetisation in roads, and potential inventory issues in residential real estate.
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