Year of Transformation: How India’s Real Estate Sector is Expected to Grow in 2025

By Ashwani Kumar

New Delhi, February 13, 2025: In 2025, the Indian real estate sector is likely to enter a transformative journey, driven by strengthened market sentiments, high demand, and new supply across key segments. The sector is projected to expand to $5.8 trillion by 2047, increasing its GDP contribution from 7.3 per cent to 15.5 per cent. This year, the sector is expected to be a landmark year, marked by record-breaking retail and office leases, a decade-high in residential sales and launches, and soaring consumer confidence in the sector. As the economy continues its steady recovery and urbanization accelerates, the realty market is poised to witness substantial growth in residential, commercial, and retail domains.

The growth is underpinned by several factors like a revitalized economy, navigated by steady GDP growth and increased foreign investments, mega infrastructure projects like expressways, metro expansions, and more enhancing connectivity across urban and sub-urban regions. Together, these growth drivers are setting the stage for a strong realty market, creating opportunities for developers to innovate and for investors to capitalize on emerging trends.

Moreover, the evolving dynamics of the sector denote a strong growth trajectory. The housing market showed strong fundamentals and a consistent demand for residential properties. As per CBRE’s report, the premium and luxury housing segments experienced a rise in demand, with their collective share of the overall residential demand increasing from 6 per cent in 2019 to 16 per cent in the first nine months of 2024. This surge in demand for premium and luxury properties has prompted developers to launch a substantial number of new projects, making up about 19 per cent of India’s total new residential launches during the period, with Delhi-NCR contributing significantly to the national numbers.

Further, in the commercial segment, the office segment has seen transactions involving nearly 53.7 million square feet of space in the January-September period of 2024, a 27 per cent increase over the same period last year, as recorded by Knight Frank. This growth is primarily driven by GCC and India-facing businesses, which are seeking modern office spaces to accommodate their expanding operations. Demand is further enhanced by flexible work arrangements that require adaptable and innovative workspace solutions.

Additionally, retail real estate is gaining prominence for its accessibility and charm. As per JLL, the top seven Indian cities will add over 45 million sq ft of retail real estate through 88 new developments. This anticipated growth will outstrip the retail space supply from the past decade (2014-2023), which totaled around 38 million sq ft. The projected retail developments will be larger compared to those that became operational in the last decade. This signifies a notable trend in the retail market moving towards larger-sized experience-led developments. Besides, the total expected addition of retail space, Delhi NCR is expected to garner the highest 43 per cent share in the supply in the next five years. Notably, Gurugram is likely to lead the real estate market in NCR, driving growth in both the luxury and commercial segments.

In 2025, developers should prioritize delivering high-quality, sustainable projects with timely completion, incorporating eco-friendly designs, energy-efficient features, and smart technologies to appeal to today’s environmentally conscious buyers. Mixed-use developments will be particularly attractive, offering diversified spaces that blend residential, commercial, and retail elements. Hence, this year promises to offer a wealth of opportunities across residential, commercial, and retail markets, with emerging trends shaping the future of the industry. Developers, investors, and end-users have a chance to capitalize on the evolving dynamics and align themselves with growth hotspots, sustainable developments, and high-return investment opportunities.

The author heads sales and marketing at Pyramid Infratech