The Indian real estate sector is set to grow further in 2025, with new opportunities emerging in Tier 2 and Tier 3 cities. After a strong performance in 2024 across residential, office, and industrial segments, 2025 is expected to be a year of stability and innovation, according to a report by Colliers India.
Key factors such as rapid urbanization, completion of major infrastructure projects, and the development of industrial corridors are likely to drive real estate growth in smaller cities. These factors will open doors for new investments and developments in cities beyond the traditional metropolitan hubs.
Strong Performance in 2024
In 2024, the real estate sector witnessed significant growth. Gross leasing in the top six cities reached 47 million square feet by the third quarter, marking a 23% increase compared to the previous year. The residential sector also showed robust performance, supported by stable interest rates. Housing prices in the top eight cities rose by 11% annually, and sales and launches remained strong.
The industrial and warehousing sector recorded a 17% growth in demand during the first nine months of 2024, with 20.2 million square feet of leasing activity. Delhi-NCR and Chennai accounted for nearly half of this activity, showcasing the growing demand in these regions.
Institutional investments in Indian real estate remained steady in 2024, with $4.7 billion invested in the first nine months. Office and industrial segments accounted for over 70% of these investments. By the end of the year, total investments are expected to reach $5-6 billion, reflecting investor confidence in the sector’s long-term growth potential.
Indian Real Estate in 2025
In 2025, alternative asset classes like data centers, co-living spaces, and senior housing are expected to grow rapidly. These segments cater to changing demographics and consumer preferences, highlighting a shift in the real estate market.
Industrial and warehousing demand is likely to remain strong, driven by increased manufacturing and a thriving logistics sector. Residential activity is also expected to maintain its momentum, with strong sales across affordable, middle-income, and luxury housing segments.
The real estate sector has benefited from supportive government policies, such as Small and Medium REITs (SM-REITs) and improvements to state-specific RERA regulations. These measures have improved transparency and created a fair pricing environment, attracting both developers and investors.
Future Outlook
The leasing market, driven by domestic occupiers and Global Capability Centres (GCCs), is expected to close 2024 on a strong note. With continued investor confidence and a supportive regulatory environment, 2025 is poised to be a promising year for the Indian real estate sector.
Tier 2 and Tier 3 cities, in particular, are set to become the new growth hubs, offering opportunities for developers and investors to tap into untapped markets. The combination of infrastructure development, urbanization, and innovative asset classes will shape the future of Indian real estate.
The Indian real estate sector is on track for another strong year in 2025, with growth extending beyond major cities to smaller urban centers. This shift reflects the country’s evolving economic landscape and the sector’s ability to adapt to changing demands. As investments pour in and new opportunities arise, the industry is well-positioned for sustained growth in the coming years.
