India’s real estate sector shifted decisively from post-pandemic recovery to structural strength in 2025, with premium housing, office leasing and emerging asset classes driving sustained growth, according to an annual review by Knight Frank India. The consultancy said strong fundamentals were evident across residential, commercial, retail, logistics, warehousing and data centres, supported by policy stability, steady end-user demand and India’s broader economic momentum. It described 2025 as a defining year that reinforced confidence in the long-term outlook for the property market. Knight Frank noted that the sector is moving beyond a cyclical upswing towards a structural realignment anchored in genuine demand, improved governance and maturing capital markets. The firm added that India is on track to become a USD 1 trillion real estate economy by the end of the decade. Residential real estate remained the strongest growth pillar, led by a pronounced shift towards premium and luxury housing. Homes priced above Rs 10 million accounted for more than half of total residential sales across major cities, reflecting changing buyer preferences and rising purchasing power. Financially stable end-users replaced speculative investors as the primary demand drivers, enabling sales momentum to continue even amid rising prices. Key markets such as Bengaluru, Hyderabad, Chennai and Delhi NCR recorded double-digit price appreciation during the year, driven by limited availability of quality supply and sustained buyer confidence. Developers increasingly focused on premium projects offering stronger brand assurance, sustainability features, privacy and digital integration. In contrast, the affordable housing segment remained under pressure due to higher construction costs and constrained financing. Knight Frank said this imbalance highlights the need for targeted policy intervention to support lower-income buyers and restore balance across the residential market. Tier-2 and Tier-3 cities continued to increase their share of housing activity, supported by infrastructure development, rising household incomes and state-level reforms. The consultancy said the expanding role of these cities represents one of the most significant structural shifts in India’s property market over the past decade. India’s office market also recorded a strong recovery in 2025 despite global economic uncertainties. Demand from multinational corporations, global capability centres, technology firms and consulting companies remained robust, reinforcing India’s position as a global operations and talent hub. Gross office absorption is expected to exceed 80 million square feet during the year, with GCC expansion emerging as a key driver. Knight Frank said this trend is deepening India’s integration into global value chains and supporting long-term demand for high-quality office space. Flexible workspaces saw record expansion, driven by the stabilisation of hybrid work models and corporate preference for agile and specialised office formats. India has emerged as one of the fastest-growing flexible workspace markets globally, with operators expanding into managed offices, enterprise solutions and sector-specific innovation hubs. Beyond residential and office assets, retail real estate staged a revival in 2025 as malls and high streets pivoted towards experiential formats. Developers focused on curated dining, wellness, entertainment and digitally enabled retail to increase footfalls and spending. Logistics, warehousing and data centres further consolidated their position as core institutional investment segments. Knight Frank attributed this growth to the expansion of e-commerce, manufacturing reforms and rapid development of digital infrastructure, which continued to attract long-term capital. Looking ahead to 2026, Knight Frank expects demand for premium and luxury housing to remain resilient, supported by rising incomes and deeper global integration. A modest easing of interest rates could also support first-time homebuyers. The office market is likely to sustain momentum, led by GCCs and global enterprises, while flexible workspaces are expected to evolve into more specialised formats. However, the consultancy cautioned that affordable and mid-income housing will require focused policy support to address the widening gap between aspiration and affordability.