From the proliferation of luxury homes and record office leasing to the rise of fractional ownership models, Rathi outlines the structural strengths and evolving demand factors that make Indian real estate an attractive choice for stability, income generation and long-term wealth creation by 2026. Edited excerpts –
Q) How would you summarize the performance of the Indian real estate market in 2025 across residential, commercial and alternative segments?
A) Residential: Home sales in the eight largest cities showed a slight decline of ~1% year-on-year during the first nine months of 2025.
Properties with a ticket size of INR 10+ million now account for 50% of sales (up from 43% a year ago), indicating a continued preference for pricier properties.
Commercial: Office leasing remained healthy through the first 9 months of 2025, marking a record year for the office segment. During this period, Class A office transactions accounted for 92%.
Demand for such spaces is increasing as users prioritize modern workplace designs and sustainability standards.
This shift has accelerated in recent years, driven by the expansion of REITs, the growing footprint of GCCs and the rapid adoption of flexible workspaces.Other segments: Industrial and warehousing activities remained buoyant, driven by third-party logistics (3PL), e-commerce fulfillment and manufacturing companies, underscoring India’s appeal as a resilient and strategically located hub for regional supply chain diversification.
Through the first nine months of 2025, transaction volumes grew 32% year-on-year to a robust 49.1 million square feet, leaving the market well-positioned to reach another record high in 2025.
Q) What key trends will determine the real estate market in 2025: demand for luxury, affordability, rental or institutional participation?
A) Units priced above INR 10 million led sales, with the share rising to 50% in the first nine months of 2025, compared to 43% a year ago.
The luxury segment (INR 200-500 million) saw 70% revenue growth during this period; however, the absolute size of this segment is small compared to other segments.
Office demand remained strong, with transaction volumes reaching 66.7 million square meters in the nine months of 2025, up from 53.7 million square meters a year ago.
This growth was supported by its diversified user base including GCCs, third-party IT services, flex operators and India-focused companies.
Declining inflation, stable repo rates, steady domestic consumption and favorable fiscal conditions supported sentiment and demand in the real estate segments.
Q) What makes real estate an attractive asset class in 2026 compared to stocks, bonds and gold?
A) Real estate is not directly comparable to stocks, bonds or gold, because each asset class behaves differently. Real estate provides tangible asset value, with features such as rental income and capital growth.
The strong institutional demand and growing rental income make it stable and more return-oriented. This is further supported by macro conditions (lower inflation, favorable interest rates, urbanization, etc.), which provide protection against the volatility seen in other asset classes.
Q) Do you expect the growth of luxury and premium homes to continue in 2026, or will the market broaden into middle-income segments?
A) The near-term outlook points to continued demand in the luxury segment as buyer demand remains skewed toward larger homes and premiumization.
That said, a recovery in the middle-income housing segment could emerge if developers and policymakers support affordability through incentives and increased supply, as India currently has an urban affordable housing shortage of 9.4 million units.
Q) Generation Z prefers digital and bite-sized investments: how does fractional real estate fit into their wealth-building journey?
A) While traditional real estate is capital intensive, newer models such as REITs, which offer fractional ownership, align well with Gen Z’s preference for guaranteed lower entry costs, liquidity and digital access.
By enabling smaller ticket sizes, these formats enable real estate investing by making it more accessible, liquid, and better aligned with diversified financial portfolios.
Q) How does fractional ownership change the perception of real estate from a “lumpy” investment to a “liquid, technology-enabled” asset?
A) Historically, real estate has been viewed as a large and illiquid asset, but fractional models enabled through technology platforms can reframe it as a diversified, investable and partially liquid asset class.
Q) What is your top piece of advice for aspiring real estate investors entering the market in 2026?
A) Focus on prime locations and asset quality. REITs can be considered for diversification.
(Disclaimer: Recommendations, suggestions, views and opinions expressed by experts are their own. These do not represent the views of the Economic Times)
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