India Real Estate Report FY 2025-26: Transformation, Trends, and Market Outlook

The latest edition of Realty Bytes presents a comprehensive view of how India’s real estate sector is undergoing rapid transformation in FY 2025-26. Powered by technology integration, sustainability-led planning, and growing institutional participation, the sector has evolved into a major pillar supporting India’s economic revival. With innovative investment models, platform-driven partnerships, and structural reforms, the market is witnessing a new phase of growth, transparency, and resilience.

This blog explores the key highlights, market shifts, investment patterns, and future impact shaping India’s real estate landscape in FY 2025-26.

A Sector Transformed: Technology, Sustainability, and Institutional Growth

India’s real estate market is progressing towards a more organised, tech-enabled, and transparent ecosystem. The FY 2025-26 landscape is defined by three major undercurrents:

1. Technology Adoption:
Advanced technologies such as artificial intelligence (AI), machine learning (ML), big data analytics, and Internet of Things (IoT) solutions are revolutionising how properties are built, valued, marketed, sold, and managed. From predictive pricing to automated valuations, tech-led tools are enhancing precision and efficiency.

2. Sustainability Imperatives:
Green buildings, energy-efficient designs, and environmentally conscious development practices are gaining momentum. Developers are integrating sustainability into master plans to meet regulatory expectations and consumer demand for eco-friendly living.

3. Institutional Participation:
Institutional investors, private equity funds, and structured investment vehicles are driving capital inflows. Models like small and medium REITs (SM-REITs) and real estate tokenisation are enhancing accessibility, lowering entry barriers, and boosting investor confidence.

Innovative Investment Models: REITs, Tokenisation, and Consolidation

The report highlights how emerging investment structures are reshaping the sector:

Small & Medium REITs (SM-REITs)

The introduction of SM-REITs has opened new avenues for investors seeking stable yields and diversified real estate exposure. These structures promote:

Greater transparency

Lower investment thresholds

Improved liquidity

Real Estate Tokenisation

Tokenisation is bringing a digital dimension to property ownership, enabling fractional ownership with enhanced transparency and faster transactions. This trend aligns with India’s push toward digital financial inclusion.

Mid-Sized Consolidations & Platform-Based Partnerships

Mergers and acquisitions (M&A) activity increased to 36 deals in FY 2025-26. Although values moderated to USD 619 million, the trend reflects:

Strategic consolidation

Portfolio expansion

Collaborative development models

This has increased transactional momentum, especially across commercial and industrial segments.

Residential Market Update: Mixed Trends but Rising Confidence

The residential sector continues to show steady performance, although growth varies by price band.

Affordable Housing

Sales declined by 9% year-on-year in Q1 2025

Unsold inventory dropped by 19%, indicating improved absorption and supply balancing

The segment faces affordability pressures but remains a crucial part of India’s housing ecosystem.

Premium and Low-Density Developments

Consumers are increasingly gravitating toward:

Premium residences

Larger living spaces

Low-density gated communities

Lifestyle-led infrastructure

This shift is driven by evolving post-pandemic preferences, hybrid work routines, and rising aspirations.

Flexible Living: Co-Living and Organised Rentals Gain Ground

Flexible living models are rapidly expanding across urban India. Co-living spaces, serviced rentals, and managed accommodation models are gaining traction due to:

Rising migrant population

Affordability concerns

Demand for flexible tenure

Supportive regulations such as the Model Tenancy Act

This shift is reshaping India’s urban rental landscape and attracting developer interest.

The integration of AI, ML, and big data is enabling smarter decisions and personalised customer experiences. Developers and property platforms are using these tools for:

Predictive demand forecasting

Hyper-personalised property recommendations

Automated valuation models

Intelligent design planning

Additionally, IoT-powered smart homes are expected to dominate new launches, offering enhanced energy efficiency, better security, and improved convenience.

Investment Activity: Strong PE Momentum and Rising M&A Deals

Private equity (PE) remains the most influential source of capital in FY 2025-26.

Key Stats

PE investments totaled USD 3.15 billion across 48 transactions

Nearly half of total investment activity came from PE funding

M&A volumes rose to 36 deals, signaling a more structured market approach

Investors are showing increased interest in assets with long-term stability, rental potential, and infrastructure-linked growth.

The report highlights a significant shift in consumer behavior driven by changing lifestyles.

Key Trends

Growing preference for premium and lifestyle-centric homes

Increased demand for sustainable and low-density developments

Rising interest in flexible rentals

Strong shift toward Tier-2 cities and well-connected urban suburbs

Tier-2 locations like Jaipur, Lucknow, Indore, Coimbatore, and Chandigarh are emerging as strong residential and commercial hubs due to better affordability and infrastructure upgrades.

Alternative Real Estate Assets: A High-Growth Category

The digital economy and national infrastructure push have accelerated demand for alternative real estate assets.

Fast-Growing Segments

Data centers

Logistics parks

Warehousing hubs

Industrial clusters

These categories are attracting significant institutional capital due to rising e-commerce activity, cloud adoption, and supply-chain modernization.

The growing acceptance of fractional ownership and REIT models further signals a shift toward a diversified, tech-enabled, and investor-friendly real estate environment.