Mumbai, Dec 16: Knight Frank India in its annual review of the country’s real estate performance, highlighting 2025 as a defining year that marked a decisive shift from recovery to structural transformation. The sector demonstrated strong fundamentals across all verticals—residential, commercial, retail, logistics, warehousing, and data centres—driven by policy stability, end-user demand, and India’s sustained economic momentum.
Reflecting on the sector’s evolution, Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India, said,
“The progress made in 2025 has reaffirmed our belief in the underlying strength of India’s real estate sector. What we are witnessing is not just a cyclical upswing, but a structural realignment built on genuine demand, better governance, maturing capital, and a deepening trust in India’s long-term economic trajectory. As India moves confidently toward becoming a USD 1 trillion real estate economy by the end of the decade, the opportunities ahead are both exciting and transformative.”
Residential Market: Premiumisation Strengthens, End-User Demand Drives Growth
India’s residential real estate market sustained its upward momentun, with premium and luxury housing emerging as the dominant demand segment. Homes priced above INR 10 million accounted for more than half of all sales across major cities, underscoring the shift in affordability, aspiration, and buyer profile. Financially stable end-users replaced speculative investors as the primary market drivers, contributing to sustained demand even as prices rose across key metros. Markets such as Bengaluru, Hyderabad, Chennai, and Delhi NCR recorded double-digit price appreciation, reflecting both scarcity of quality supply and deep buyer conviction.
Developers increasingly focused on premium offerings that prioritise brand assurance, sustainability, privacy, and advanced digital integration. Meanwhile, the affordable housing segment remained constrained by rising input costs and limited financing, signalling the need for targeted policy interventions to restore balance across the income spectrum. Tier-2 and Tier-3 cities continued to expand their share of residential activity, supported by infrastructure upgrades, rising household incomes, and proactive state-level reforms. Their growing influence marks one of the most important structural shifts of the decade.
Office Market: Strong Comeback Led by GCC Expansion and Flexible Workspace Growth
India’s office real estate market delivered one of the most confident performances of the decade. Despite global economic headwinds, demand from multinational corporations, global capability centres (GCCs), technology firms, consulting companies, and innovation-led enterprises remained robust.
Gross office absorption is expected to cross 80 million sq ft in 2025, reaffirming India’s position as a global talent and enterprise hub. GCC expansion, in particular, emerged as a powerful driver, consolidating India’s role in the global value chain.
Flexible workspaces recorded record expansion, driven by hybrid work stabilisation and enterprises’ preference for agile, specialised formats. With India now among the world’s fastest-growing flex markets, operators broadened their portfolios to include enterprise solutions, managed offices, and sector-specific innovation hubs.
Retail, Logistics, Warehousing and Data Centres: Rejuvenation and Rapid Institutionalisation
Retail real estate saw a resurgence in 2025, with high streets and malls pivoting to experiential formats that enhanced footfalls and conversion. Curated dining districts, wellness clusters, entertainment anchors, and digitally enabled stores shaped a new era of consumption.
Simultaneously, logistics, warehousing, and data centres cemented their place as core investment categories. E-commerce expansion, manufacturing reforms, and India’s accelerating digital infrastructure pushed institutional capital deeper into these asset classes.
Warehousing Market Insights
Sector Outlook for 2026
Knight Frank India anticipates a continued strengthening of demand across premium and luxury residential segments, fuelled by rising incomes and greater global integration. A marginal reduction in interest rates in upcoming monetary policies could unlock a new cycle of first-time homebuyers.
The commercial office sector is expected to maintain its momentum, with GCCs, technology firms, and global enterprises solidifying India’s status as a strategic operations hub. Flexible workspaces will continue evolving into more specialised and sector-driven formats. Tier-2 and Tier-3 markets will play an expanding role in both residential and commercial growth, supported by infrastructure delivery and economic decentralisation.
However, the affordable and mid-income housing categories will require focused policy support to bridge the growing gap between consumer aspiration and affordability. Across segments, trust—rooted in governance, developer credibility, infrastructure execution, and institutional capital—will remain the defining theme of the next phase.
