India’s real estate market is entering a new phase of institutional depth and diversification, with industrial & warehousing assets, alternative segments, and investments showing sustained momentum through 2025 and a strong growth outlook for 2026, according to industry assessments.
Robust occupier demand, policy support, infrastructure expansion, and rising investor confidence are collectively reinforcing India’s position as a high-potential real estate market in the Asia-Pacific region.
Industrial & Warehousing: Demand Stays Strong, Supply Keeps Pace
India’s industrial and warehousing sector demonstrated remarkable resilience in 2025, with cumulative leasing across the top eight markets touching 26.5 million sq ft in the first nine months, marking an 11% year-on-year increase.
Grade A warehousing demand remained at record levels despite global trade uncertainties. Third-party logistics (3PL) players continued to dominate, accounting for nearly one-third of total leasing activity, while e-commerce and engineering companies sharply increased space absorption.
Industry estimates suggest annual demand could reach 30–40 million sq ft, with new supply also expected to remain elevated at 35–40 million sq ft, indicating a balanced market.
2026 Outlook: Policy Push and Infrastructure to Unlock New Markets
Looking ahead, the industrial and warehousing sector is expected to sustain 30–40 million sq ft of average annual demand, driven by a strong policy-led manufacturing push and expanding logistics networks.
Flagship initiatives such as Make in India, Production-Linked Incentive (PLI) schemes, and the Gati Shakti master plan are expected to catalyze large-format warehouse transactions. Deals of 200,000 sq ft or more are likely to account for 40–50% of Grade A leasing in 2026, particularly across logistics corridors.
Plug-and-Play Parks Gain Momentum
Plug-and-play industrial parks are emerging as a preferred choice for occupiers seeking faster setup and reduced time-to-market. These facilities offer compliance-ready units, core infrastructure, and flexible layouts, allowing businesses to scale operations efficiently. Their adoption is expected to accelerate further in 2026.
Tier II and III Cities Emerge as Logistics Growth Engines
While Tier I cities will continue to command a significant share of demand, Tier II and Tier III markets are poised for stronger traction. Expansion of expressways, dedicated freight corridors, industrial corridors, and Multi-Modal Logistics Parks (MMLPs) is enabling industrial activity to move beyond traditional hubs.
Improved regional connectivity is expected to unlock new logistics clusters and manufacturing zones across the country.
Hyperlocal Warehousing and EV Ecosystem Drive New Demand
The rapid rise of e-commerce, q-commerce, and quick-delivery platforms is reshaping urban supply chains. Demand for micro-fulfilment centres, dark stores, and in-city warehouses is expected to increase as retailers move closer to end consumers.
Simultaneously, growth in electric vehicle (EV) manufacturing and ancillary industries is driving demand for specialized facilities such as battery storage, electronics manufacturing, and component warehouses.
Alternative Assets: Data Centres, Senior Living and Co-Living Expand Footprint
Alternative real estate segments continued to scale in 2025, led by data centres, co-living, and senior living formats.
India’s data centre capacity has crossed 1,300 MW, translating into nearly 16 million sq ft of real estate footprint, more than doubling over the past five years. This growth is being fuelled by cloud adoption, AI, IoT, data localisation norms, and government policy support.
Co-living inventory has reached 0.3 million beds, while senior living stands at 0.03 million beds, indicating early-stage but accelerating adoption.
2026: Alternative Assets Enter Accelerated Growth Phase
Data centre capacity is expected to rise to 2 GW over the next few years, with strong traction in AI-led computing, edge data centres, and 5G-driven infrastructure. Expansion into smaller cities is also anticipated, supported by state-level policies.
Senior living demand is expected to rise in Tier II cities and spiritual hubs, while NRI interest is growing in established urban centres. Co-living is projected to see market consolidation, formalisation, and expansion beyond Tier I cities, with penetration potentially rising to 8–10% in the next two years.
Investments: Institutional Capital Remains Resilient
Institutional investments in Indian real estate remained steady at USD 4.3 billion in the first nine months of 2025, with full-year inflows expected to reach USD 6 billion.
Office and residential assets accounted for nearly 60% of total investments, while industrial, alternative, and mixed-use assets together attracted more than one-fifth of total capital.
2026 Investment Outlook: Deeper Institutionalisation Ahead
Institutional inflows are projected to rise to USD 6–7 billion in 2026, driven by balanced participation from domestic and foreign investors.
Emerging trends include:
- Build-to-core strategies and early-stage land investments
- Rising investments in retail and mixed-use developments
- Greater capital allocation to Tier II and III markets
- Expansion of REITs, SM-REITs, and AIF platforms
- Increased focus on ESG-compliant and sustainable assets
Together, these trends signal a deeper phase of institutionalisation for Indian real estate across asset classes.
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