Indian real estate growth in 2026 to be driven by investment, innovation

India’s real estate sector is set for steady growth in 2026, fuelled by rising institutional investment, strong consumer demand and growing investor confidence, said Colliers India.   Building on recent momentum, demand is expected to rise further, with global capability centres (GCCs) leading leasing activity, expanding their presence across key locations while focusing on quality spaces, technology adoption and sustainability.   India’s real estate sector continued growing in 2025, driven by strong economic growth, rising consumption, supportive government policies and steady investor confidence, aided by easing inflation, improved credit and lower lending rates.   “Indian real estate is entering 2026 with stronger growth prospects and greater depth across asset classes. Elevated domestic consumption, sustained occupier activity, and rising investor confidence will continue to anchor demand.   Commercial and residential growth is set to remain robust, driven by evolving workplace strategies, rising homeownership, and infrastructure-led connectivity enhancements,” said Badal Yagnik, chief executive officer and managing director, Colliers India.   Colliers India further noted that office demand remained strong in 2025, driven by technology, BFSI, engineering and flex operators seeking high-quality workspaces. Housing sales stayed firm despite cost pressures, supported by rising incomes and better connectivity. Industrial, warehousing and alternative assets such as data centres and co-living also saw steady growth, backed by logistics upgrades, digital adoption and sustained institutional investor interest, including across Tier-II and Tier-III cities.   Institutional investment is expected to remain strong, driven by Real Estate Investment Trusts (REITs), Small and Medium (SM) REITs, Infrastructure Investment Trusts (InvITs) and Alternate Investment Funds (AIFs), alongside greater ESG integration and technology-led development, strengthening India’s position as a future-ready, globally competitive real estate market.   “Industrial & warehousing demand will accelerate further as domestic manufacturing scales up and supply chains modernise. At the same time, alternative asset classes, including data centres, co-living and senior living, will attract greater institutional interest amid demographic and digital shifts. Additionally, with expansion of REITs, SM-REITs & InvITs and a growing focus on quality, sustainability & technology-led development, 2026 is set to reinforce India’s position as a future-ready and globally competitive real estate market,” added Yagnik.   India’s office market crossed 50 million square feet of leasing in the first nine months of 2025, up 8 per cent year-on-year, led by GCCs. Grade A demand may reach 70 million square feet, with limited new supply keeping vacancies stable and rentals rising 5–10 per cent.   In 2026, flexible workspaces will gain prominence alongside GCCs as firms adopt core-plus-flex models. Office demand will diversify beyond technology, expand into Tier-II and Tier-III cities, and stabilise at 70–75 million square feet annually.   GCC leasing is expected to reach 30–35 million square feet in 2026, accounting for 40–50 per cent of Grade A office demand. Flexible workspaces are likely to contribute nearly 20 per cent of leasing, driven by hybrid work, cost efficiency and faster market entry. Flex stock is projected to reach 85–90 million square feet, with GCCs forming 40–45 per cent of enterprise demand as they seek scalable, custom-built offices.   Meanwhile, over 370 million square feet of office stock could be listed through future REITs, potentially lifting REIT penetration to 20 per cent. Flex operators are expected to expand across Tier-I and Tier-II cities, while 80–90 per cent of new supply in 2026 is likely to be green certified.   Furthermore, Colliers India noted that older office buildings over 10 years old, spanning more than 350 million square feet, offer retrofitting potential exceeding ₹425 billion, which could help developers and investors improve occupancy levels and rental values over the long term.   India’s demographic advantage, with a median age of around 30, will continue to support housing demand across first-time homebuyers and high-net-worth individuals. Lifestyle-led preferences are expected to drive demand for plotted developments, gated villas, premium apartments and vacation homes, while investors focus on emerging micro-markets with long-term potential. Demand traction and preference for premium product offerings will push property prices in these smaller cities up by 10–15 per cent annually, supported by better infrastructure and targeted expansion by reputed developers.