India's real estate sector concluded with strong capital market performance, recording 11 deals worth ₹17,867 crore between April and December FY26, according to Equirus Capital. This activity matched the total deal count achieved in FY25, with potential to surpass six-year highs if momentum continues through the March quarter. The sector has simultaneously achieved its best housing affordability levels in three decades.

Capital Market Performance Shows Sustained Momentum

The real estate sector's fundraising activity demonstrates consistent investor confidence, with both deal volume and capital mobilization approaching record levels. Since FY18, the sector has cumulatively raised ₹72,331 crore from capital markets across different segments.

REITs have emerged as the dominant fundraising vehicle, accounting for the largest share of capital mobilization over the six-year period.

Housing Affordability Reaches Historic Levels

The sector has witnessed a dramatic improvement in housing affordability metrics across India. The property price-to-income ratio declined significantly to 3.3 in 2024, compared to 22 in 1995, representing the most favorable affordability conditions in nearly 30 years.

This improvement stems from multiple factors including steady home loan rates, stable rental yields, and rising income levels. Equirus Capital expects the gap between home loan rates and rental yields to narrow further, potentially falling below 500 basis points in FY26.

Market Dynamics Support Continued Growth

Residential absorption patterns across top cities continue to demonstrate healthy demand-supply balance. Absorption rates have consistently matched or exceeded new supply, supporting developers' launch momentum while maintaining controlled inventory levels. This balance has created favorable conditions for sustained sector growth.

Robin Mangla, President at M3M India, noted that the performance reflected consolidation supported by macro stability and increasing homeownership demand. He highlighted that large infrastructure projects, including the Noida International Airport, could further boost residential demand and property valuations, particularly benefiting NCR markets such as Noida.

Outlook Supported by Infrastructure Development

The sector's trajectory appears supported by broader infrastructure development initiatives. Major projects are expected to create additional demand drivers, particularly in key metropolitan regions. The combination of improved affordability metrics, sustained capital market interest, and infrastructure development positions the sector for continued momentum into FY26.

India's industrial and logistics sector recorded its strongest performance ever, with leasing activity reaching an all-time high of 76.5 million square feet across 24 major cities. This represents a significant 19% increase from the 64.5 million square feet leased in the previous calendar year, according to data from real estate consultant Savills India.

The sector's robust growth reflects the continued post-pandemic recovery trajectory, with diverse industries driving demand for industrial and logistics spaces across the country.

Sector-wise Demand Distribution

The leasing activity was led by three key sectors that collectively accounted for nearly 70% of total demand:

Manufacturing companies emerged as the largest occupiers, reflecting India's growing industrial base and the government's focus on domestic production capabilities.

Tier-I Cities Lead Growth

Eight tier-I cities demonstrated exceptional performance, recording 20% growth in leasing activity. These major metropolitan areas collectively accounted for the majority of industrial and logistics space absorption:

The eight tier-I cities include Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, Delhi-NCR, and Pune. Among these, Delhi-NCR maintained its position as the top performer with 13 million square feet of leasing, compared to 9.8 million square feet in the previous year.

Emerging Markets Show Promise

Tier-II and tier-III cities also contributed significantly to the overall growth, with leasing activities increasing 14.5% to 17 million square feet. The 16 cities in this category include Guwahati, Bhubaneshwar, Patna, Hosur, Coimbatore, Rajpura, Lucknow, Jaipur, Nagpur, Surat, Indore, Kochi, Hubli, Vizag, Belgaum, and Anantapur.

This growth in smaller cities indicates the geographic diversification of industrial and logistics activities, as companies seek cost-effective locations with good connectivity.

Market Outlook

Savills India projects continued momentum in the sector, expecting both supply and absorption of industrial and logistics spaces to surpass 80 million square feet in the following year. This optimistic outlook reflects the sustained demand from manufacturing, logistics, and e-commerce sectors, supported by India's economic growth and infrastructure development initiatives.