According to Crisil, investments across key infrastructure sectors—renewables, roads, real estate, and new-age segments—are expected to grow at a robust 45–50% over the current and next financial years, reaching approximately ₹23–24 lakh crore. This sustained capital expenditure cycle is likely to keep real estate demand supported, even as the sector navigates shifting consumption patterns and pricing pressures.
Krishnan Sitaraman, Chief Ratings Officer, Crisil Ratings, notes that these sectors together account for nearly half of India’s infrastructure investments and remain central to the country’s GDP growth trajectory. While largely insulated from direct geopolitical disruptions, he cautions that prolonged global tensions could drive inflationary pressures, indirectly impacting costs across sectors, including real estate.
Infrastructure push continues to underpin real estate demand
The linkage between infrastructure expansion and real estate growth is becoming more pronounced as investments diversify beyond traditional sectors. From large-scale renewable energy projects to the rapid expansion of data centres and digital infrastructure, these developments are creating new demand centres for both commercial and residential real estate.
Crisil highlights that data centre capacity is expected to grow at 35–40% annually through FY28, driven by rising adoption of artificial intelligence and cloud technologies. This surge is not only reshaping commercial office demand—particularly in technology-led markets—but also driving ancillary real estate development, including logistics hubs, warehousing, and urban housing clusters.
Similarly, ongoing investments in roads and logistics infrastructure are improving connectivity and unlocking new micro-markets, particularly in peripheral urban areas. This is expected to sustain residential demand, even as core city markets grapple with affordability constraints.
The broader push towards decarbonisation—through initiatives such as green hydrogen and battery storage—is also expected to create new industrial corridors, further supporting real estate development in emerging locations.
Residential market stabilises on high base; investor interest remains intact
Within real estate, the residential segment is showing signs of consolidation after a period of strong growth. Crisil expects demand to remain largely flat over the current and next fiscal, primarily due to elevated capital values. However, this moderation comes on the back of a high base, following above-average growth in recent years.
Developers are also likely to face rising inventory levels, indicating a gradual rebalancing of supply and demand.
That said, market sentiment remains resilient, particularly among investors. This trend is echoed by industry players.
Shapoorji Pallonji Real Estate (SPRE), which is set to host a multi-city property expo in Gurugram, points to a clear shift in buyer behaviour. According to Rima Kirtika, Chief Marketing Officer at SPRE, the market is witnessing an increasing inclination towards investment-led purchases, with buyers actively seeking opportunities across high-growth corridors.
She notes that in markets such as Gurugram, buyers are becoming more discerning, focusing not just on immediate value but also on long-term appreciation potential. The company’s upcoming property expo, featuring projects across cities such as Mumbai, Pune, Bengaluru, and Howrah, aims to cater to this evolving demand by offering a diverse portfolio across price points ranging from ₹60 lakh to ₹25 crore.
This diversification of demand—across geographies and asset types—is expected to provide a cushion against near-term demand moderation in the residential segment.
Commercial real estate driven by flexible workspaces and GCC expansion
In contrast to the residential segment, commercial real estate—particularly office spaces—is expected to maintain steady growth. Crisil estimates leasing demand to grow at 6–7% over the current and next fiscal, supported by flexible workspace operators, BFSI firms, and global capability centres (GCCs).
A key driver of this trend is the structural shift in how enterprises consume office space.
Smartworks, India’s largest managed office platform by area under management, recently crossed 10 million square feet of operational portfolio, becoming the first listed flexible workspace provider in the country to achieve this scale. The milestone reflects growing enterprise preference for managed, campus-led office solutions that offer scalability and operational efficiency.
Neetish Sarda, Founder and Managing Director of Smartworks, describes this as a fundamental shift in the office market, where demand is increasingly moving towards larger campuses, multi-city deployments, and longer-term commitments. The company’s strong performance—reporting around 34% year-on-year revenue growth in Q3 FY26 and maintaining occupancy levels of approximately 93% at mature centres—underscores the resilience of this segment.
This trend is also being reinforced by the expansion of GCCs in India, which are driving demand for high-quality office spaces across major cities. However, risks remain, particularly from a potential slowdown in IT sector leasing and the impact of artificial intelligence on workforce requirements.
Bridging talent and execution gaps becomes critical
As real estate projects grow in scale and complexity, the importance of execution capabilities and skilled talent is becoming increasingly evident. This is reflected in initiatives such as Bharti Real Estate’s newly launched “Abhigyan” programme, which aims to bridge the gap between academic learning and industry requirements.
The initiative, which began with an on-ground engagement involving civil engineering students from IIT Delhi at Worldmark Aerocity, focuses on providing practical exposure to large-scale urban developments. Through immersive field visits and interactions with industry experts, the programme seeks to equip future professionals with a deeper understanding of project planning, construction management, and execution challenges.
S.K. Sayal, Managing Director and CEO of Bharti Real Estate, emphasises that as infrastructure and real estate projects become more complex, it is critical for young professionals to gain real-world insights beyond theoretical knowledge. Such initiatives are expected to play a key role in building the talent pipeline required to sustain the sector’s growth.
Risks remain, but credit strength offers stability
Despite the positive outlook, challenges persist across segments. In commercial real estate, demand from the IT sector could weaken amid global economic uncertainties, while AI-driven disruptions may alter long-term space requirements. In residential markets, rising prices and increasing inventory levels could weigh on near-term demand.
At the same time, broader infrastructure risks—such as delays in renewable energy transmission capacity or slowdown in road project awarding—could have indirect implications for real estate by affecting the pace of development in key regions.
However, Crisil highlights that strong credit profiles of developers provide a critical buffer. Stable cash flows, prudent leverage, and improved operating performance have strengthened balance sheets across sectors, enabling developers to navigate cyclical challenges more effectively.
Manish Gupta, Deputy Chief Ratings Officer at Crisil Ratings, notes that around 15–20% of investments in these sectors will be funded through equity, ensuring financial discipline. While mature segments such as data centres and smart meters are seeing easier access to capital, emerging areas like green hydrogen may require higher upfront investments and continued policy support.
Outlook: Growth intact, but execution key
As India advances towards its long-term development goals, the interplay between infrastructure and real estate will remain central to the growth narrative. While global uncertainties and sector-specific challenges may create short-term headwinds, the underlying drivers—policy support, domestic demand, and evolving business models—remain firmly in place.
For the real estate sector, the next phase of growth will depend on the ability to adapt to changing demand patterns, manage pricing pressures, and execute projects efficiently. With infrastructure investments continuing to expand and credit profiles remaining stable, the sector appears well-positioned to sustain its momentum—albeit with a sharper focus on execution and risk management.
