India's Residential Real Estate Sector Dominates with 70% Market Share by 2026
India’s real estate sector, encompassing residential, commercial, retail, hospitality, and SEZ spaces, is witnessing a surge in demand. According to the latest report by investment firm Equirus Capital, the residential segment alone is expected to account for 70% of the market by 2026, with the addition of 10 million new homes.
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.
