A new report jointly released by FICCI and KPMG India projects that the Indian real estate market could expand nearly nine-fold from around $650 billion in 2025 over the next two decades, driven by urbanisation, technology adoption, institutional capital and rising incomes.
At the same time, the latest Knight Frank–NAREDCO Real Estate Sentiment Index shows the sector entering a phase of caution in the near term, with more than half of stakeholders expecting housing sales to decline over the next six months.
The contrast between long-term optimism and immediate demand moderation highlights the changing dynamics of India’s property market after several years of strong post-pandemic growth.
India’s real estate market projected to reach $5.8 trillion by 2047 The FICCI-KPMG report, titled Reimagining India’s Real Estate Landscape: The role of technology in value chain transformation, was released during the 19th edition of the FICCI Real Estate Summit 2026 in New Delhi.
The report said real estate, which currently contributes 7.3% to India’s GDP, will continue to play a central role in employment generation, capital formation and urban development as the country advances toward its Viksit Bharat vision.
It projected that the value of new homes in India could touch $906 billion by 2034, while nearly 41 million square feet of new retail developments are expected by 2028.
The report also highlighted the rapid pace of digital transformation across the sector. AI adoption in India’s corporate real estate segment surged to 91% in 2025 from less than 5% in 2023, reflecting how developers and investors are increasingly integrating technology into project planning, execution, sales and asset management.
Raj Menda, Chairman, FICCI Committee on Urban Development and Real Estate and Chairman, Supervisory Board, RMZ Corp said technology has become central to the future of the sector.
“India’s real estate sector has earned its place as one of the most consequential growth stories in the world. Sustaining that position now demands digital discipline, embedded not as a front-end tool but across the entire project lifecycle,” said Raj Menda.
“The evidence is unambiguous: AI adoption in India’s corporate real estate moved from under 5% to 91% in just two years. Technology is no longer a point of differentiation; it is a condition for access to capital and trust,” he added.
Housing market shows signs of slowing demand Even as the long-term growth outlook remains strong, the latest Knight Frank–NAREDCO Real Estate Sentiment Index for Q1 2026 suggests residential demand is beginning to soften.
The Current Sentiment Score dropped sharply to 49 in Q1 2026 from 60 in Q4 2025, slipping into pessimistic territory. The Future Sentiment Score also declined to 50 from 61 in the previous quarter.
According to the survey, 52% of stakeholders expect housing sales to worsen over the next six months, while 45% foresee a decline in new project launches.
The report attributed the moderation in sentiment to rising geopolitical tensions, elevated crude oil prices, inflationary pressures and tighter global financial conditions.
Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India said the sector is entering a “phase of cautious recalibration”.
“The moderation in sentiment reflects the growing influence of global uncertainties, particularly energy market disruptions and geopolitical tensions,” said Shishir Baijal.
“While India’s economic fundamentals remain robust, the real estate sector is entering a phase of cautious recalibration. The residential segment is witnessing a natural moderation after a strong growth cycle, while the office market continues to exhibit resilience driven by strong occupier demand,” he added.
Prices remain firm despite weakening buyer sentiment Despite softer demand expectations, residential prices are expected to remain elevated.
The Knight Frank-NAREDCO survey found that 73% of respondents expect home prices to either remain stable or rise further, while only 27% anticipate a decline.
Developers say higher costs of construction materials, labour and financing continue to keep upward pressure on pricing, even as demand slows.
Parveen Jain, National President, National Real Estate Development Council (NAREDCO) said the moderation reflects short-term caution rather than structural weakness in the market.
“Real estate sentiment has moderated amid global macroeconomic headwinds and inflationary pressures; however, this reflects short-term caution among stakeholders rather than any weakening in the residential market’s underlying strength,” said Parveen Jain.
“The recent softening in residential sentiment can be seen as a natural recalibration following a sustained growth phase, with end-user demand and steady price appreciation continuing to support resilience,” he added.
Office market remains resilient amid uncertainty While residential demand is showing signs of moderation, commercial real estate continues to remain a bright spot.
The Knight Frank-NAREDCO report said office leasing activity reached record highs during Q1 2026, driven by sustained demand from multinational firms and Global Capability Centres (GCCs).
About 41% of respondents expect office leasing activity to improve further, while 81% expect office rents to either remain stable or rise due to limited supply of Grade A office spaces in key markets.
The report noted that the office segment continues to anchor overall sectoral growth even as residential sentiment weakens.
Regulators call for transparency and Tier-2 expansion Speaking at the summit, Anand Kumar, Chairman, Real Estate Regulatory Authority (RERA), NCT of Delhi called for greater transparency and operational efficiency across the sector.
“I urge all stakeholders to be honest, to move beyond individual interests, and to make this sector more efficient and transparent,” said Anand Kumar.
He also stressed the importance of accelerating development in Tier-2 and Tier-3 cities to reduce migration pressures on metropolitan centres and unlock new investment opportunities.
Meanwhile, Sanjay R. Bhoosreddy, Chairman, Real Estate Regulatory Authority (RERA), Uttar Pradesh said Uttar Pradesh’s real estate sector would play a key role in helping the state achieve its ambition of becoming a $1 trillion economy.
“The RERA Act of 2016 has ensured a level playing field for all promoters as well as between promoters and buyers. The State Government is putting in place investor-friendly policies to strengthen the sector further,” said Sanjay R. Bhoosreddy.
He added that project approvals by UP RERA have steadily increased in recent years.
“UP RERA was sanctioning around 190 projects per annum till 2023. This increased to 259 projects in 2024, 308 in 2025, and we have already sanctioned 108 projects in the current year,” Bhoosreddy said.
Industry sees long-term growth intact despite short-term caution Industry leaders said India’s real estate market is entering a more mature phase where technology adoption, governance standards and institutional capital will increasingly shape growth.
Sandip Somany, Past President, FICCI and Chairman and Managing Director, Somany Impresa Group said the sector’s long-term momentum remains strong.
“India’s real estate sector is entering a new phase of growth, backed by rising investor confidence and steady demand. Its continued strength reflects the sector’s resilience and vital role in driving economic growth,” said Sandip Somany.
The broader message emerging from both reports is that while India’s real estate market retains enormous long-term potential, rising prices, affordability pressures and global macroeconomic uncertainty are prompting buyers and developers to turn more cautious in the near term.
