India's Residential Real Estate Sector Dominates with 70% Market Share by 2026
India's real estate sector is experiencing robust growth, with the residential segment projected to account for 70% of the market by 2026. The sector is driven by strong demand, stable economy, and positive buyer sentiment.
Real EstateResidential MarketCommercial Real EstateRetail Real EstateHospitality Real EstateReal EstateSep 05, 2025
The residential sector has shown strong momentum, with Q1 2025 sales reaching 93,280 units. This growth is backed by established developers, a stable economy, and positive buyer sentiment. The commercial space has also seen significant activity, with leasing volume hitting 20.3 million square feet in Q1 2025, marking a 5% year-over-year growth. The overall commercial market is projected to grow at a 19.8% CAGR, reaching $253 billion by 2033.
In the retail sector, FDI in multi-brand retail is expected to boost demand, with leasing hitting a 5-year high of 3.1 million square feet in the first half of 2024. The top 7 cities have added 9 million square feet of retail space in 2025, compared to 8.7 million square feet in 2023.
The hospitality sector is also on the rise, with occupancies expected to grow at a 3.5-4% CAGR. Around 12,000 rooms were added in 2023, and an additional 15,000 to 16,000 rooms are set to be added by 2025. In terms of investment, the post-COVID period (2020-2023) has seen a surge in investor interest, with over US$400 million invested, and plans for US$2.3 billion more.
India's SEZs have also seen significant growth, with the December 2023 rule amendment enabling partial denotification and unlocking 15-18 million square feet for IT/ITeS. This move is expected to further boost the IT and ITeS sectors.
India’s tier-1 cities recorded housing sales worth ₹3.6 lakh crore in H1 2025, a 9% increase from the previous year, despite a 4% dip in units sold, as per the CREDAI-CRE Matrix report. The rise was driven by a 14% jump in average ticket size to ₹1.42 crore, reflecting a strong shift toward premium housing.
NCR led with a 26% revenue share, boosted by luxury homes above ₹3 crore forming 73% of its sales value. MMR followed with a 23% share, supported by rising ultra-premium demand. Southern markets like Chennai (+23%) and Bengaluru (+4%) also showed value growth, while Pune struggled with declines. Ahmedabad and Kolkata displayed strong momentum, with the latter’s luxury segment doubling its share. The trend highlights homebuyers’ preference for premium, well-located properties.
In the second quarter, India’s real estate mood brightened, with the Sentiment Index surging to 56 (from 54), ending a four-quarter slide. Future Sentiment jumped to 61 (from 56), and developer confidence also surged (Future Sentiment from 53 to 63) on easier financing and a cumulative 100 bps RBI repo cut. Robust demand in premium housing and steady office leasing by GCCs and flex operators further bolstered the sector. Pricing expectations remained firm, with 94% foreseeing stable or higher prices.
Frequently Asked Questions
What is the expected growth of the residential real estate sector in India by 2026?
The residential real estate sector in India is expected to account for 70% of the market by 2026, with the addition of 10 million new homes.
What factors are driving the growth in the residential real estate sector?
The growth in the residential real estate sector is driven by strong demand, established developers, a stable economy, and positive buyer sentiment.
How has the commercial real estate sector performed in the first quarter of 2025?
The commercial real estate sector saw leasing volume hit 20.3 million square feet in Q1 2025, marking a 5% year-over-year growth.
What is the projected growth in the hospitality sector in India?
The hospitality sector is expected to see occupancies grow at a 3.5-4% CAGR, with around 12,000 rooms added in 2023 and an additional 15,000-16,000 rooms set to be added by 2025.
What recent rule amendment has impacted SEZs in India?
The December 2023 rule amendment has enabled partial denotification and unlocked 15-18 million square feet for IT/ITeS in SEZs, boosting the IT and ITeS sectors.
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