Real growth boosts estates

India’s real estate sector is poised to enter 2026 on a stronger footing, backed by resilient demand, deeper institutional participation, and expanding opportunities across the asset classes. After a steady uptrend through this year, the sector will benefit from elevated domestic consumption, improved affordability, sustained occupier activity, and higher investor confidence. Domestic and global uncertainties, however, cloud this optimistic outlook. “Indian real estate is entering 2026 with stronger growth prospects and greater depth across asset classes,” says Badal Yagnik, CEO & MD, Colliers India. Let us look at the prospects across the different segments.

Commercial: Leasing Momentum

According to the Colliers’ report, the office segment remained buoyant in 2025, and crossed 50 million sq ft of leasing in the first nine months, led largely by Global Capability Centres (GCCs), which accounted for nearly 40 per cent of the demand. Technology, BFSI, engineering, and flex-space operators continued to drive absorption across Tier I cities, supported by evolving workplace strategies, and a clear preference for high-quality, amenity-rich assets. “Looking ahead, office demand is expected to stabilise at 70-75 million sq ft annually from 2026 onwards,” notes the report.

GCCs are set to deepen their presence across functions such as research, analytics, AI, and product development, and flexible workspaces are projected to form nearly one-fifth of Grade A leasing as hybrid and ‘core-plus-flex’ models gain traction. Rentals are likely to firm up further amid steady demand, and limited supply of premium assets. According to Knight Frank annual Asia-Pacific Outlook report, India enters 2026 with one of the strongest office market outlooks in the APAC region, supported by GCC-led expansion, tech hiring, and a deep talent pool.

“Bengaluru, Mumbai, and National Capital Region (NCR) continue to outperform, with rental growth expected to range between 7.5-9 per cent year-on-year in 2026, which will place India among the top regional performers. The national office landscape crossed a major milestone in 2025, as it surpassed a billion sq ft of Grade A-led stock across the top eight cities,” highlights the Knight Frank report. Thus, several retail investors are excited about commercial spaces, which can yield attractive rents, and compete with returns from other asset classes, especially as stocks remain subdued in 2025.

Shishir Baijal, International Partner & CMD, Knight Frank India, explains, “India continues to stand out as a strategic growth market. The country’s affordability, depth of talent, regulatory stability, and a maturing workplace ecosystem enhance its appeal relative to other global hubs. We expect office leasing to reach a new peak in 2025, with gross leasing volumes crossing 80 million square feet. Further, this momentum is expected to continue into 2026, supported by a comparatively robust domestic business environment and resilient occupier sentiment.” This augurs well for the segment.

Residential: Affordability and Infra

Housing sales remained resilient in 2025 despite the higher construction costs, aided by rising income levels, improved connectivity, and a cumulative 125 basis point reduction in the benchmark lending rates. Developers benefited from infrastructure expansion that widened residential catchment areas, especially in the suburban and peripheral locations near the office hubs. In 2026, demand will remain healthy, supported by urbanisation, demographic tailwinds, and a growing preference for premium, lifestyle-oriented housing. Plotted developments, gated villas, green homes, and redevelopment projects in urban cores will see heightened interest, alongside traction in Tier II and III cities.

Most real estate developers expect the housing prices to rise in 2026, supported by sustained end-user demand, according to a sentiment survey by CREDAI and CRE Matrix. Conducted in November–December 2025 among 647 developers, it finds that nearly 70 per cent anticipate home prices to increase by more than five per cent next year. Nearly half expect prices to rise by 5-10 per cent, and around a fifth foresee higher gains of 10-15 per cent. Only a minority predict sharper appreciation, and a quarter believe the price growth to stay below five per cent. Less than 10 per cent expect a decline.

Warehouses: Supply Chains

The industrial and warehousing segment scaled up in 2025 as domestic manufacturing expanded, and supply chains modernised. Demand from the third-party logistics, e-commerce players, and engineering firms remained robust. These trends will accelerate in 2026. Alternative asset classes such as data centres, co-living, and senior living draw increasing institutional attention amid digital adoption, and demographic shifts. The expansion of REITs, SM-REITs, and InvITs is reshaping ownership structures, and broadening the access to income-generating real estate assets. As global supply chains get rooted away from China in nations like India, this renewed interest may enhance in the future.

Plug-and-play industrial hubs will emerge as the go-to options for occupiers who want faster turnaround, and rapid ramp-up. Flexible layouts, and lower time-to-market will enable these hubs to become strategic fir for scalable growth. Policy-led push through national schemes such as Make-in-India, Gati Shakti, and Production-Linked units will enthuse occupiers. Engineering and auto players will opt for larger, future-ready warehouses. Rising freight movement will enhance demand for modern warehouses, logistics parks, and manufacturing units across the country. Hyperlocal models will amplify requirements as retailers and logistics operators expand footprints closer to high-demand neighbourhoods.

Sustainability and Tech

Quality, sustainability, and technology-led developments emerge as defining themes across segments. From green-certified offices, and energy-efficient housing to AI-enabled building management systems, developers and investors align strategies with long-term ESG priorities. “With expansion of REITs, SM-REITs, and InvITs, and a growing focus on quality, sustainability and technology-led developments, 2026 is set to reinforce India’s position as a future-ready and globally competitive real estate market,” says Colliers’ Yagnik. As real estate moves into 2026, the emphasis will shift from cyclical recovery to structural growth, underpinned by institutions, diversification, and a maturing investment landscape.

Institutional investments held steady in 2025, and attracted more than $4 billion in the first nine months. The end-year figure is expected to be $6 billion. In 2026, the money deployed may remain at similar levels, which reiterates growing depth, and confidence among the investors. Office and residential segments will dominate, and contribute 60 per cent of the investments, supported by both demand (occupiers), and supply (healthy pipeline) factors. “Additionally, alternative and mixed-use assets are likely to witness significant capital allocation, together accounting for more than one-fifth of the inflows in the year,” states the Colliers’ report.