Total institutional inflows are expected to cross USD 6 billion by the end of 2025.
India’s real estate sector maintained steady growth momentum in 2025 despite geopolitical tensions, global macroeconomic uncertainty, and evolving trade dynamics, supported by strong domestic demand, policy reforms, and sustained infrastructure investment.
“Despite widespread uncertainty, India’s real estate sector demonstrated resilience in 2025. Policy reform, infrastructure growth, and rising income supported stable demand across asset classes,” said Shrinivas Rao, FRICS, CEO, Vestian. “Strong office absorption, steady warehousing activity, and renewed investment flows highlight the sector’s long-term growth trajectory and its expanding role in India’s economic development.”
Economic Stability Provides a Strong Foundation
India continued to register steady economic progress in 2025, underpinned by robust domestic consumption, structural reforms, and ongoing investment in large-scale infrastructure. This stability enabled the real estate sector to sustain activity across office, retail, warehousing, and residential segments, even as global markets remained volatile.
Union Budget 2025–26 Strengthens Real Estate and Infrastructure Push
The Union Budget 2025–26 reinforced the government’s long-term Viksit Bharat vision, with total expenditure rising 7.4% to INR 50.65 lakh crore, placing infrastructure and urban development at the core of economic strategy.
Revised income tax slabs enhanced household disposable income, providing support to housing demand. The allocation of INR 15,000 crore to SWAMIH Fund II for completing one lakh stressed housing units improved liquidity in the affordable housing segment.
In addition, the INR 1 lakh crore Urban Challenge Fund is expected to catalyse institutional-grade city development, while the National Geospatial Mission aims to digitise land records and improve planning transparency. A national framework encouraging states to promote Global Capability Centers (GCCs) in Tier II cities is expected to diversify office demand geographically.
Office Market Hits Record Absorption Levels
The office sector emerged as the strongest performing asset class in 2025. Leasing activity in the first nine months rose 15% year-on-year, with every quarter outperforming the corresponding period in 2024. Annual gross absorption is projected to reach a record 75 million sq ft, the highest ever in a calendar year.
GCCs remained the primary demand driver, accounting for 42% of pan-India absorption in 9M 2025. Bengaluru, Hyderabad, Pune, and NCR led activity. The IT–ITeS sector contributed 39%, while flex operators expanded to 12%, reflecting evolving workplace strategies. BFSI demand moderated to 14%.
Bengaluru, NCR, and Pune accounted for nearly two-thirds of new supply, while Bengaluru, NCR, and Mumbai together contributed 85% of total absorption. ESG considerations remained critical, with green-certified assets comprising 82% of total leasing.
Warehousing and Logistics Remain Stable
India’s warehousing and logistics sector recorded 28.1 million sq ft of absorption in 9M 2025, reflecting a modest 9% year-on-year decline amid temporary softening in the first half.
Bhiwandi alone accounted for nearly 25% of national absorption, reinforcing its status as a leading logistics hub. 3PL players led demand with a 35% share, followed by engineering and manufacturing at 19%. After a subdued first half, e-commerce rebounded strongly in Q3, contributing 23% of quarterly demand.
Rental values strengthened across NCR, Bengaluru, Hyderabad, and Mumbai, registering annual growth between 17% and 47%, while Chennai, Pune, and Kolkata witnessed localized corrections.
Government initiatives such as PM Gati Shakti, the Urban Infrastructure Development Fund, and ongoing GST rationalisation continued to support long-term sector fundamentals.
Retail Leasing Gains Momentum Amid Supply Constraints
Retail leasing activity remained robust through 9M 2025 and is expected to surpass 2024 levels. Rising discretionary spending and stable occupier confidence supported demand for quality retail assets.
Fashion and apparel led leasing, followed by F&B and entertainment, reflecting a growing shift toward experience-driven retail formats. However, limited new supply tightened vacancy levels, keeping mall rentals stable and driving marginal appreciation on high streets.
Housing Market Moderates as Prices Impact Affordability
The residential market witnessed moderation in 2025 as rising prices affected affordability. Sales and new launches crossed three lakh units each in 9M 2025, but unsold inventory rose to nearly six lakh units due to softer absorption.
Despite lower volumes, the value of housing sales increased, driven by sustained demand for premium and luxury homes. Developers increasingly focused on amenity-rich, well-located projects, while prices rose across major cities due to higher construction costs and premium segment demand.
The RBI maintained the repo rate at 5.50%, resulting in marginal reductions in mortgage rates and offering limited relief to homebuyers.
Domestic Capital Anchors Institutional Investments
Institutional investments in Indian real estate stood at USD 4.37 billion in 9M 2025, down 5.5% YoY, primarily due to a subdued first quarter. Investment momentum improved in Q2 and Q3, which together accounted for USD 3.55 billion.
Commercial real estate dominated inflows with a 79% share, supported by strong office leasing. Residential assets attracted 11% of total investments. Domestic investors played a critical role in sustaining momentum, while co-investment structures gained traction among foreign investors amid global uncertainty.
Total institutional inflows are expected to cross USD 6 billion by the end of 2025.
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