India’s Real Estate Market Has Broken Free of Market Cycles, says CBRE Yearend Report

New Delhi, December 17, 2025: India’s real estate market is now anchored by structural fundamentals rather than market cycles, says Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE. “A period of sustained investments, rapid digitisation, and larger capital pools has created the conditions for a healthy balance between quality and quantity across asset classes. The office sector has proven to be critical to Indian real estate, as global and domestic enterprises expand their portfolios and consolidate into future‑ready, green‑certified campuses. Retail is maturing into an experience economy, where curated tenant mixes, dining, entertainment, and omnichannel integration are lifting productivity and brand equity.

“Industrial & logistics (I&L) is transitioning from scale to sophistication, with Grade‑A warehousing, multimodal linkages, and tech‑enabled operations becoming the default.

“The residential segment has witnessed sustained momentum, supported by homeownership appetite, improving affordability, and disciplined launch pipelines. Investors continue to show significant interest with equity inflows expected to reach an all-time high this year.

“The next decade would be led by those who design real estate as interoperable with plug‑and‑play capabilities for transit, logistics, digital infrastructure, and services. As a pivotal force driving India’s economic growth, the industry is set to play a transformative role in shaping the nation’s future and unlocking new avenues of progress.

“In this context, following are the key sectoral highlights of the year alongside forward-looking perspectives.”

Another Record Year for Office Sector Leasing Expected

• Demand strength persists: Underpinned by strong economic growth, India’s office market extended its post-pandemic upswing through 2025—with gross leasing expected to surpass 80 million square feet (msf). Between January and September 2025, India’s office market recorded 60 msf of leasing — the highest ever for the first nine months of any year.
• ‘Flight-to-quality’: During the year, occupiers continued to invest in collaborative and innovation-focussed workspaces, fuelling the demand for high-quality, tech-enabled, and experience-driven environments. This resulted in continued leasing through expansion and relocation with ‘flight-to-quality as a key determinant.
• GCCs — the largest occupier: In 2025, GCCs are likely to continue accounting for 35-40 per cent of total office demand. These centres accounted for more than 55 per cent of large office deals in 9M 2025 (over 100,000 sq. ft.), reaffirming global corporations’ long-term expansion plans.
• Green priorities firm up:  There is a growing focus on sustainability among occupiers with the majority of tenants having already defined their ESG goals. Developers are aligning closely by delivering green-certified, ESG-compliant projects with LEED and IGBC certifications becoming the norm.
• About 84 per cent of new supply delivered between January and September 2025 was green-certified, while 77 per cent of leasing occurred in such projects (over two-thirds within integrated tech parks) clearly signalling occupiers’ commitment to sustainable, future-ready campuses.
• Demand composition remains diverse: Office space leasing remained broad-based, led by technology firms and supported by flex operators, BFSI, engineering and manufacturing, and RCA occupiers. Demand during the period also reflected a strengthening share of domestic enterprises alongside sustained participation from global occupiers, underscoring the sector’s diversified and resilient demand base.
• What to expect in 2026: Resilient demand fundamentals are expected to support sustained leasing momentum, led by portfolio expansion, workplace reconfiguration, and a continued shift toward premium, future-ready assets. Continued absorption in investment-grade spaces is likely to compress vacancies and drive selective rental appreciation across high-performing micro-markets. Additionally, occupiers are anticipated to broaden their footprint into peripheral hubs, drawn by the influx of quality supply and the developing infrastructure in such locations.

Industrial & Logistics: 3PL, E-Commerce Players Lead the Way

• Space take-up strengthens: Industrial & logistics leasing activity recorded steady growth during January to September 2025, supported by sustained occupier demand. Delhi NCR, Bengaluru, and Hyderabad together accounted for nearly 60 per cent of total space take-up.
• Third-party logistics (3PL) and e-commerce firms lead warehousing demand: 3PL players led leasing activity with an estimated 35 per cent share, while e-commerce and engineering and manufacturing (E&M) firms together accounted for around 60 per cent of overall warehousing demand. This reflects a continued shift towards outsourcing logistics operations to optimise costs and reduce lead times.
• Q-comm poised for expansion: Rising consumer expectations for rapid delivery are increasing demand for last-mile infrastructure. Consequently, marquee quick-commerce players are poised to significantly expand their operations across several cities.
• ‘Flight-to-quality’ pushing rents: Demand for ‘flight-to-quality’ assets and rising land / development costs supported rental growth of up to 10 per cent Y-o-Y across key micro-markets in 9M 2025.
• Large-size deals driving: Large-sized leasing deals (over 100,000 sq. ft.) drove space absorption, with their share increasing to 38 per cent in 9M 2025 from 27 per cent in 9M 2024.

Retail Remains Resilient

• Continued expansion: India’s retail real estate witnessed a broad-based, experience-led expansion in 2025. Supply addition in the first nine months of 2025 stood at about 2.2 msf. Retail space take-up reached ~4.6 msf. during this period, led by Hyderabad, Mumbai, and Delhi-NCR.

• It’s all about Fashion! Space absorption was led by the fashion and apparel category, accounting for nearly 50 per cent of the overall demand. It was primarily fuelled by store openings across sustainable fashion, streetwear, ethnic/fusion, athleisure, luxury/designer, and D2C brands.
• D2Cs strengthen omnichannel presence: D2C brands are increasing their offline presence through a mix of formats, from pop-up shops and showrooms to traditional brick-and-mortar stores, to enhance their connect with the consumers. These stores are also doubling down as fulfilment centres for e-commerce.
• Experience gaining popularity: Demand for immersive experiences pushed entertainment operators to expand beyond traditional malls. This category’s share in mall tenant mixes has risen significantly in recent years, growing from 10 to 13-15 per cent generally, and reaching as high as 40 per cent in select upcoming malls developed by a key player.
• Foreign brands make beeline: Foreign brands continued to see India as an attractive market with the list of new entrants including names such as Bershka, Sungboon Editor, Qlocktwo, Eleventy, L’Objet, Galeries Lafayette, Maje, Wagamama, Lego, and Tesla.
• Tenant mix optimisation takes centre stage: Retailers are expected to continue choosing locations based on brand maturity, where established brands generally prefer prime malls and mall owners optimise the tenant mix by replacing underperformers with high-density brands to boost revenue.

Equity Investments Poised to Climb Another Peak

• Inflows scale a new peak: Equity capital inflows into India’s real estate market rose 14 per cent Y-o-Y to a record high of $10.2 billion in 9M 2025. The investments are anticipated to reach $12-14 billion by the end of the year, recording a new high.
• Land acquisitions continue to dominate: Land / development sites and the office sector received almost three-fourths of overall investment flows during this period. Residential, office, and mixed-use developments attracted ~79 per cent of land / development site investments, underscoring a healthy spread of greenfield projects across key sectors.
• Focus on emerging sectors: Investment activity transcended core real estate sectors to target emerging segments such as data centres (DCs), hotels, and healthcare. These sectors recorded an increase of ~55 per cent Y-o-Y in investments, particularly DCs and hotels, recording total capital inflows of ~$798 million.
• Developers take the lead: Among investor cohorts, developers led the capital inflows in 9M 2025, contributing 49 per cent of the total, followed by institutional players at over 26 per cent.
• Average deal size up: The average deal size also increased to ~$55 million in 9M 2025, from ~$45 million in 9M 2024.
• Non-Tier-I cities gaining traction: While Mumbai, Bengaluru, and Pune continue to attract majority of the inflows, investments into Tier II and III cities surged 58 per cent Y-o-Y to ~$879 million. Ahmedabad, Indore, Coimbatore, Panipat, and Ludhiana collectively constituted over 60 per cent of these inflows.

Residential Sector Remains Buoyant

• Sector steady: India’s housing market sustained its buoyancy in 9M 2025, driven by residential sales exceeding 210,000 units and supported by a matching surge of over 210,000 new units launched. Mumbai and Bengaluru collectively accounted for around 40 per cent of the total supply-demand activity during this period.
• Land deals in focus: Land acquisition for residential projects reached $7.3 billion between 2023 and 9M 2025 (~57 per cent share in overall land transactions), primarily fuelled by developers expanding their land banks in response to robust housing sales activity witnessed in recent years.
• High-end segment at forefront: The high-end housing segment emerged as the dominant category in sales, capturing ~27 per cent of total housing demand in 9M 2025. This shift placed it slightly ahead of both the mid-end and budget categories, which secured an almost equal share of ~25 per cent each. The share of overall residential demand commanded by the premium and luxury segments continued witnessing significant increase, rising from 6 per cent in 2019 to 10 per cent in 9M 2024, and further surging to 15 per cent in 9M 2025.
• Rental housing evolving: The rental housing market is transforming as investors and marquee players increasingly looking to acquire entire rental assets — a shift evident in student housing, co-living, and senior living. Private equity (PE) also presents a significant lending opportunity within these emerging rental categories.
• Steady performance expected: Sales and launches are expected to remain steady with the RBI’s monetary easing, and government initiatives such as the reduction in GST rates. The health of the sector is further underscored by a decline in the home loan delinquency ratio to 0.7 per cent at the end of FY2025 from its pandemic-era peak of ~2 per cent.