Shutterstock6 Key Real Estate Market Insights from India GRI 2025
Expert analysis on commercial, residential, warehousing, retail, hospitality, data centres, and the rise of domestic capital
October 28, 2025Real Estate
Written by Jorge Aguinaga
India GRI 2025 convened the nation's most reputable real estate leaders for a series of insightful roundtable discussions. The agenda was crafted to address the key investment strategies, opportunities, and challenges across commercial, residential, warehousing, retail, hospitality, and digital infrastructure.
This report synthesises the key insights exchanged during these discussions. It is designed to serve as an essential guide for real estate professionals, providing the crucial intelligence needed to make informed decisions and capitalise on the immense opportunities in India’s evolving market.
India’s real estate market in 2025 presents a landscape of exceptional growth and profound transformation, driven by robust economic fundamentals.
A pivotal shift is underway, marked by the significant rise of domestic capital. Indian family offices and institutional funds are beginning to replace foreign dominance in key transactions. This is evidenced by the most recent REIT, which was subscribed almost entirely by domestic investors, a stark contrast to the first REIT where foreign institutions took 69%. Large Indian family offices have emerged as powerful players, capable of acquiring major assets independently.
Investment remains highly concentrated in a select few Tier-1 micro-markets. While occupier preferences are beginning to evolve toward Tier-2 city expansion, investors are maintaining a disciplined, micro-market-driven approach, currently avoiding ventures into cities such as Indore or Jaipur. Key hubs like Bangalore, Hyderabad, and Pune continue to attract the most attention.
The commercial office sector is the primary focus, driven by a supply-demand imbalance. Strong demand, fuelled by the expansion of Global Capability Centres (GCCs), is outstripping the limited supply of quality Grade-A assets. This has resulted in single-digit vacancy rates for prime properties.
Consequently, with a limited pool of investable core stock, the market is shifting to core-plus and value-add strategies. Refurbishment and ESG-compliant upgrades are emerging as key strategies for yield enhancement.
Although alternative sectors such as data centres, co-living, and education assets are gaining traction, domestic investors still view large-scale investment as "a little too early". They are waiting for these asset classes to mature and for successful case studies to establish a clear proof of concept before committing significant capital.
The market's primary constraint is not a lack of capital but a critical shortage of high-quality, investable supply. This supply-side pressure is a key factor driving prices up. The challenge is compounded by soaring land prices in key markets, which have gone "out of whack" and will impact future costs.
To succeed, an unwavering focus on quality Grade-A+ assets is essential, as lower-grade properties have few takers. Given the scarcity of core assets, investors must develop a strong competency in core-plus strategies, specifically the refurbishment of well-located older buildings. Finally, strategically engaging with the rising tide of domestic capital, particularly family offices, is crucial for co-investment and creating future exit opportunities.
A fundamental shift is underway as domestic family capital is "skyrocketing". While global inflows remain stable, domestic capital is now the dominant force, powerfully illustrated by REIT subscriptions shifting from 90% foreign to 90% domestic capital. This trend is poised to accelerate, with an estimated USD 1.3 trillion of generational wealth transferring hands in the next five years. Family offices are also rapidly institutionalising their governance structures and increasing their cheque sizes significantly.
The core theme is the evolution of real estate from a legacy asset to a strategic asset allocation. This has fuelled a move towards financialisation, with families converting physical holdings into structured investments.
REITs were an important entry point, and interest is now expanding to alternatives such as data centres and warehousing. This reflects a mindset change from "own and operate" to the more strategic "allocate and orchestrate" model, especially among the next generation.
A key challenge is the cultural difficulty in transitioning from an operator to an allocator mindset, which can cause friction with developers. For larger investments, a preference for direct control and avoiding management fees often leads families to build in-house teams, hindering the growth of a broader multi-family office ecosystem. Furthermore, many established families are hesitant to manage third-party capital due to the significant fiduciary responsibility and potential reputation risk involved.
For fund managers, the priority is building credible investment management platforms that can earn the trust of families. Success will hinge on offering well-packaged, financialised products that are easy to understand and consume. For family offices, fully embracing the role of a sophisticated capital allocator is crucial. Tapping into the vast and growing pool of non-institutional domestic wealth represents the most significant opportunity for growth.
The market is underpinned by strong and growing demand for quality assets, with an annual absorption of 50 to 60 million square feet across the top 15 cities. This demand is supported by an increasing availability of capital from diverse sources, including institutions, AIFs (Alternative Investment Funds), family offices, and a substantial rise in interest from Indian domestic capital.
The optimal exit strategy is largely dictated by the scale of the portfolio. For smaller platforms, typically between 1-10 million square feet, a private sale is often the most suitable route. This approach offers upfront liquidity, is easier to implement, and can provide tax advantages, particularly through offshore sale structures.
For medium-sized portfolios of 10-20 million square feet, investment trusts (InvITs) or REITs present a viable path. These vehicles are designed for stabilised, income-generating assets, and a developer-backed structure is considered highly advantageous as it ensures a continuous pipeline of assets and demonstrates a long-term commitment.
An initial public offering (IPO) is considered the best option for large-scale platforms exceeding 30 million square feet, especially those with substantial land banks and significant future growth potential. An IPO allows for the monetisation of the entire business, not just the physical assets, which can lead to superior valuation multiples.
However, this path is not for everyone. It requires patient investors with an 8-10 year horizon and involves higher costs, intense quarterly pressure for growth, and significant exposure to the volatility of capital markets. A successful IPO is heavily dependent on conducive market conditions at the time of listing.
Beyond scale, several other factors are critical for a successful exit. A well-planned and clean corporate structure is essential, particularly for an IPO, which requires all assets to be held under a single Indian entity.
For public listings, investors value diversification across geographies and product types, such as industrial, warehousing, and in-city logistics. The quality and stickiness of tenants are also paramount, with industrial clients often seen as more secure due to longer lease terms.
ESG considerations have transitioned from being an optional extra to a fundamental requirement for the industry. It is now a standard specification driven by demands from both investors and clients. Implementing ESG initiatives such as solar power, EV charging stations, and smart energy management can directly add to revenue, generate significant operational cost savings, and enhance tenant stickiness, thereby improving a platform's overall exit readiness and valuation.
Developers are pivoting away from creating new markets on the urban periphery, now focusing on established, high-velocity micro-markets to capitalise on existing demand.
This shift is coupled with a move away from the underperforming affordable housing segment towards mid-market and luxury developments, which necessitate prime locations.
Financial discipline has become paramount, with a target gross return of at least 20% frequently serving as a critical benchmark for sanctioning new projects.
A dominant theme is the increasing market consolidation and the rise of branded developers, who now capture a disproportionate share of market value compared to the volume of units they supply.
These players can command significant price premiums, especially in the luxury segment, as buyers associate their brand with reliability, quality, and the assurance of delivery.
However, this scale may come at a cost; large conglomerates are often perceived as having higher construction and overhead expenses, potentially making them less profitable at a project level than more agile local developers who possess deep market knowledge and cost-control efficiencies. The primary advantage for larger firms remains their superior access to cheaper capital, which allows them to outbid competitors for prime land parcels.
Key headwinds for the sector include escalating land costs, driven by intense competition from capital-rich players that inflates landowner expectations.
Regulatory approval delays also remain a significant risk, capable of eroding investor returns substantially. In response, developers must remain nimble, dynamically adjusting product mix and unit sizes to meet shifting consumer demand, which has leaned towards larger homes since the pandemic.
Despite these challenges, the market outlook is robust, supported by strong growth outpacing GDP and maturing regulations - such as the Real Estate Regulation and Development Act (RERA) - that have increased transparency.
This transition is underpinned by powerful macroeconomic tailwinds, including unprecedented infrastructure growth, rapid urbanisation, and a strong domestic market, which together are fuelling a long-term, consumption-driven growth cycle expected to be a "hospitality bull run" for the next 20 years.
Investor sentiment has matured in tandem with the market. Capital is increasingly institutional, flowing towards professionally managed, investment-grade assets. The investment rationale has moved from funding prestige projects to a sharp focus on return on equity, with asset classes such as hotels becoming serious businesses attracting IPOs rather than being secondary assets in a portfolio.
The preferred strategy is now the mixed-use development, which blends commercial, retail, and hospitality elements to de-risk portfolios and generate stable, annuity-like incomes. Capital is readily available across the stack for these well-conceived projects.
This strategic shift extends geographically. While Tier-1 markets continue to boom, significant growth is occurring in Tier-2 and Tier-3 cities, partly driven by corporations seeking to escape high rental costs in primary hubs.
Furthermore, new economic hotspots are emerging as powerful demand drivers. Airport cities are evolving into self-sufficient "mini cities" and destinations in their own right, becoming new urban centres.
Simultaneously, religious tourism has become a significant factor, creating exuberance and demand for large-scale assets in previously untapped markets.
Ultimately, the blueprint for success in India's dynamic market is clear. It requires a forward-looking strategy that anticipates the needs of an increasingly discerning consumer by building integrated ecosystems rather than standalone properties.
Prioritising a seamless customer journey is paramount, as is embracing the institutionalisation required to attract serious global capital in India’s evolving, experience-centric economy.
A fundamental paradigm shift is underway, with data centres evolving from a real estate yield asset to a complex operating business. It is now considered primarily a power business, where success is dictated by access to cheap and reliable energy, not just location.
Real estate's contribution to total project cost has diminished significantly, often accounting for less than 10%. This explains why developers are willing to pay escalating land prices in prime zones, confident that the operational returns justify the initial outlay. The focus has moved to managing operating expenses, with renewable energy seen as a key enabler for reducing high power costs.
This operational complexity is driven by rapid technological change. The rise of AI and GPU computing has rendered traditional data centre designs obsolete. Rack densities have skyrocketed from a historical 3-4 KW to as high as 200 KW, necessitating a swift pivot from air-cooling to advanced liquid-cooling technologies. While demand from hyperscalers is robust, the enterprise segment shows signs of cooling off, with some larger organisations opting to build their own captive facilities.
Geographically, development remains skewed towards metro areas such as Mumbai and Chennai due to the availability of power, optical fibre networks, and skilled talent. However, these hubs face severe land constraints, pushing new projects to peripheral locations such as Navi Mumbai and beyond. In response, an emerging trend is the development of inland data centres to establish new low-latency corridors across the country.
Despite the immense opportunities, significant headwinds persist. Capital remains a constraint, and the projected demand for power far outstrips current supply plans, posing a long-term risk.
For financiers, the sector's rapid evolution and obsolescence risks make it one of the toughest asset classes to underwrite. Banks struggle to keep pace with technological changes and are often only comfortable providing senior debt for pre-leased assets, while private credit is still playing catch-up.
For investors, the strategic imperative is clear: success requires a deep understanding of the operational and technological layers of the business, moving far beyond a traditional real estate mindset.
The GRI Institute would like to thank everyone who participated in India GRI 2025 and we look forward to seeing you again at our future events.
Key Takeaways:
- A "skyrocketing" wave of domestic capital, particularly from Indian family offices, is becoming the dominant force in the market, replacing traditional foreign dominance in key transactions.
- A critical shortage of high-quality, investable Grade-A assets is forcing investors to move beyond scarce core strategies and focus on core-plus and value-add refurbishments of well-located older properties.
- Sectors are maturing beyond their traditional definitions. Data centres are now a complex power business, while retail and hospitality are converging into experience-led mixed-use destinations.
- While investment remains focused on Tier-1 micro-markets, significant new growth is being driven by Tier-2/Tier-3 cities , airport "mini cities," and religious tourism hubs.
- The market is rapidly maturing. This is seen in the "financialisation" of family wealth , the rise of branded developers in residential, and the clear focus on mature exit strategies (REITs, IPOs) for warehousing platforms.
Understanding India's 2025 Real Estate Transformation
India’s real estate market in 2025 presents a landscape of exceptional growth and profound transformation, driven by robust economic fundamentals and a powerful surge in domestic capital. As the industry navigates this dynamic environment, the need for industry leaders to gather and share strategic perspectives has never been more critical.India GRI 2025 convened the nation's most reputable real estate leaders for a series of insightful roundtable discussions. The agenda was crafted to address the key investment strategies, opportunities, and challenges across commercial, residential, warehousing, retail, hospitality, and digital infrastructure.
This report synthesises the key insights exchanged during these discussions. It is designed to serve as an essential guide for real estate professionals, providing the crucial intelligence needed to make informed decisions and capitalise on the immense opportunities in India’s evolving market.
India’s real estate market in 2025 presents a landscape of exceptional growth and profound transformation, driven by robust economic fundamentals.Commercial real estate strategies
Investment outlook for core, core-plus & alternative assets
The market sentiment is decidedly optimistic, underpinned by robust fundamentals. Leasing activity is at an all-time high, and occupier confidence remains strong despite earlier concerns about remote work. This positive leasing trend is projected to continue through 2026, buoyed by the strong performance of the four office real estate investment trusts (REITs), the latest of which is up 20% from its listing price.A pivotal shift is underway, marked by the significant rise of domestic capital. Indian family offices and institutional funds are beginning to replace foreign dominance in key transactions. This is evidenced by the most recent REIT, which was subscribed almost entirely by domestic investors, a stark contrast to the first REIT where foreign institutions took 69%. Large Indian family offices have emerged as powerful players, capable of acquiring major assets independently.
Investment remains highly concentrated in a select few Tier-1 micro-markets. While occupier preferences are beginning to evolve toward Tier-2 city expansion, investors are maintaining a disciplined, micro-market-driven approach, currently avoiding ventures into cities such as Indore or Jaipur. Key hubs like Bangalore, Hyderabad, and Pune continue to attract the most attention.
The commercial office sector is the primary focus, driven by a supply-demand imbalance. Strong demand, fuelled by the expansion of Global Capability Centres (GCCs), is outstripping the limited supply of quality Grade-A assets. This has resulted in single-digit vacancy rates for prime properties.
Consequently, with a limited pool of investable core stock, the market is shifting to core-plus and value-add strategies. Refurbishment and ESG-compliant upgrades are emerging as key strategies for yield enhancement.
Although alternative sectors such as data centres, co-living, and education assets are gaining traction, domestic investors still view large-scale investment as "a little too early". They are waiting for these asset classes to mature and for successful case studies to establish a clear proof of concept before committing significant capital.
The market's primary constraint is not a lack of capital but a critical shortage of high-quality, investable supply. This supply-side pressure is a key factor driving prices up. The challenge is compounded by soaring land prices in key markets, which have gone "out of whack" and will impact future costs.
To succeed, an unwavering focus on quality Grade-A+ assets is essential, as lower-grade properties have few takers. Given the scarcity of core assets, investors must develop a strong competency in core-plus strategies, specifically the refurbishment of well-located older buildings. Finally, strategically engaging with the rising tide of domestic capital, particularly family offices, is crucial for co-investment and creating future exit opportunities.
Family capital in real estate
Strategic shifts in India’s wealth landscape
Exceptional confidence defines the current Indian real estate market, with investors seeing "great tailwinds" and huge opportunities. This optimism is driven by strong national growth projections in GDP and per capita income. A notable shift is occurring in risk appetite; while global family offices are becoming more defensive , Indian investors are moving from low-risk to high-risk profiles, keen to diversify their portfolios.A fundamental shift is underway as domestic family capital is "skyrocketing". While global inflows remain stable, domestic capital is now the dominant force, powerfully illustrated by REIT subscriptions shifting from 90% foreign to 90% domestic capital. This trend is poised to accelerate, with an estimated USD 1.3 trillion of generational wealth transferring hands in the next five years. Family offices are also rapidly institutionalising their governance structures and increasing their cheque sizes significantly.
The core theme is the evolution of real estate from a legacy asset to a strategic asset allocation. This has fuelled a move towards financialisation, with families converting physical holdings into structured investments.
REITs were an important entry point, and interest is now expanding to alternatives such as data centres and warehousing. This reflects a mindset change from "own and operate" to the more strategic "allocate and orchestrate" model, especially among the next generation.
A key challenge is the cultural difficulty in transitioning from an operator to an allocator mindset, which can cause friction with developers. For larger investments, a preference for direct control and avoiding management fees often leads families to build in-house teams, hindering the growth of a broader multi-family office ecosystem. Furthermore, many established families are hesitant to manage third-party capital due to the significant fiduciary responsibility and potential reputation risk involved.
For fund managers, the priority is building credible investment management platforms that can earn the trust of families. Success will hinge on offering well-packaged, financialised products that are easy to understand and consume. For family offices, fully embracing the role of a sophisticated capital allocator is crucial. Tapping into the vast and growing pool of non-institutional domestic wealth represents the most significant opportunity for growth.
The India GRI 2025 agenda was crafted to address key investment strategies and challenges across commercial, residential, warehousing, retail, hospitality, and digital infrastructure. (GRI Institute)
Building for the exit
REITs, IPOs & InvITs - What’s the right track for India’s warehousing platforms?
The Indian warehousing and logistics real estate sector has reached a new stage of maturity, with platforms that have invested and grown now focused on the crucial question of a viable exit path.The market is underpinned by strong and growing demand for quality assets, with an annual absorption of 50 to 60 million square feet across the top 15 cities. This demand is supported by an increasing availability of capital from diverse sources, including institutions, AIFs (Alternative Investment Funds), family offices, and a substantial rise in interest from Indian domestic capital.
The optimal exit strategy is largely dictated by the scale of the portfolio. For smaller platforms, typically between 1-10 million square feet, a private sale is often the most suitable route. This approach offers upfront liquidity, is easier to implement, and can provide tax advantages, particularly through offshore sale structures.
For medium-sized portfolios of 10-20 million square feet, investment trusts (InvITs) or REITs present a viable path. These vehicles are designed for stabilised, income-generating assets, and a developer-backed structure is considered highly advantageous as it ensures a continuous pipeline of assets and demonstrates a long-term commitment.
An initial public offering (IPO) is considered the best option for large-scale platforms exceeding 30 million square feet, especially those with substantial land banks and significant future growth potential. An IPO allows for the monetisation of the entire business, not just the physical assets, which can lead to superior valuation multiples.
However, this path is not for everyone. It requires patient investors with an 8-10 year horizon and involves higher costs, intense quarterly pressure for growth, and significant exposure to the volatility of capital markets. A successful IPO is heavily dependent on conducive market conditions at the time of listing.
Beyond scale, several other factors are critical for a successful exit. A well-planned and clean corporate structure is essential, particularly for an IPO, which requires all assets to be held under a single Indian entity.
For public listings, investors value diversification across geographies and product types, such as industrial, warehousing, and in-city logistics. The quality and stickiness of tenants are also paramount, with industrial clients often seen as more secure due to longer lease terms.
ESG considerations have transitioned from being an optional extra to a fundamental requirement for the industry. It is now a standard specification driven by demands from both investors and clients. Implementing ESG initiatives such as solar power, EV charging stations, and smart energy management can directly add to revenue, generate significant operational cost savings, and enhance tenant stickiness, thereby improving a platform's overall exit readiness and valuation.
Rethinking residential returns
Balancing portfolios across ultra-luxury, aspirational, mid-income, and affordable housing
The Indian residential market is undergoing a significant strategic transformation, moving from intuitive, "good vibe" decision-making to more methodical, data-driven land acquisition strategies with defined quarterly targets.Developers are pivoting away from creating new markets on the urban periphery, now focusing on established, high-velocity micro-markets to capitalise on existing demand.
This shift is coupled with a move away from the underperforming affordable housing segment towards mid-market and luxury developments, which necessitate prime locations.
Financial discipline has become paramount, with a target gross return of at least 20% frequently serving as a critical benchmark for sanctioning new projects.
A dominant theme is the increasing market consolidation and the rise of branded developers, who now capture a disproportionate share of market value compared to the volume of units they supply.
These players can command significant price premiums, especially in the luxury segment, as buyers associate their brand with reliability, quality, and the assurance of delivery.
However, this scale may come at a cost; large conglomerates are often perceived as having higher construction and overhead expenses, potentially making them less profitable at a project level than more agile local developers who possess deep market knowledge and cost-control efficiencies. The primary advantage for larger firms remains their superior access to cheaper capital, which allows them to outbid competitors for prime land parcels.
Key headwinds for the sector include escalating land costs, driven by intense competition from capital-rich players that inflates landowner expectations.
Regulatory approval delays also remain a significant risk, capable of eroding investor returns substantially. In response, developers must remain nimble, dynamically adjusting product mix and unit sizes to meet shifting consumer demand, which has leaned towards larger homes since the pandemic.
Despite these challenges, the market outlook is robust, supported by strong growth outpacing GDP and maturing regulations - such as the Real Estate Regulation and Development Act (RERA) - that have increased transparency.
India GRI 2025 convened the nation's most reputable real estate leaders for a series of insightful roundtable discussions. (GRI Institute)
Strategic blueprint of retail & hospitality's evolution
Branded vs. boutique & global investor preferences
A defining trend in India's real estate market is the convergence of the retail and hospitality sectors, leading to a decisive shift away from a focus on physical assets toward the creation of holistic, experience-led destinations. In this new paradigm, the primary driver of value is no longer the product or the room itself, but the memorable and seamless experience delivered to the customer.This transition is underpinned by powerful macroeconomic tailwinds, including unprecedented infrastructure growth, rapid urbanisation, and a strong domestic market, which together are fuelling a long-term, consumption-driven growth cycle expected to be a "hospitality bull run" for the next 20 years.
Investor sentiment has matured in tandem with the market. Capital is increasingly institutional, flowing towards professionally managed, investment-grade assets. The investment rationale has moved from funding prestige projects to a sharp focus on return on equity, with asset classes such as hotels becoming serious businesses attracting IPOs rather than being secondary assets in a portfolio.
The preferred strategy is now the mixed-use development, which blends commercial, retail, and hospitality elements to de-risk portfolios and generate stable, annuity-like incomes. Capital is readily available across the stack for these well-conceived projects.
This strategic shift extends geographically. While Tier-1 markets continue to boom, significant growth is occurring in Tier-2 and Tier-3 cities, partly driven by corporations seeking to escape high rental costs in primary hubs.
Furthermore, new economic hotspots are emerging as powerful demand drivers. Airport cities are evolving into self-sufficient "mini cities" and destinations in their own right, becoming new urban centres.
Simultaneously, religious tourism has become a significant factor, creating exuberance and demand for large-scale assets in previously untapped markets.
Ultimately, the blueprint for success in India's dynamic market is clear. It requires a forward-looking strategy that anticipates the needs of an increasingly discerning consumer by building integrated ecosystems rather than standalone properties.
Prioritising a seamless customer journey is paramount, as is embracing the institutionalisation required to attract serious global capital in India’s evolving, experience-centric economy.
Investing in digital infrastructure
Real estate in the changing world order of the data centres ecosystem
The Indian data centre market is experiencing a period of intense, optimistic growth, with tailwinds described as exceptionally strong. This boom is fuelled by the global AI revolution, which is channelling staggering levels of investment into digital infrastructure, exemplified by multi-billion USD deals in the US and Europe. India is seen as having significant room to grow, with a potential for more than 5 gigawatts of AI computing demand.A fundamental paradigm shift is underway, with data centres evolving from a real estate yield asset to a complex operating business. It is now considered primarily a power business, where success is dictated by access to cheap and reliable energy, not just location.
Real estate's contribution to total project cost has diminished significantly, often accounting for less than 10%. This explains why developers are willing to pay escalating land prices in prime zones, confident that the operational returns justify the initial outlay. The focus has moved to managing operating expenses, with renewable energy seen as a key enabler for reducing high power costs.
This operational complexity is driven by rapid technological change. The rise of AI and GPU computing has rendered traditional data centre designs obsolete. Rack densities have skyrocketed from a historical 3-4 KW to as high as 200 KW, necessitating a swift pivot from air-cooling to advanced liquid-cooling technologies. While demand from hyperscalers is robust, the enterprise segment shows signs of cooling off, with some larger organisations opting to build their own captive facilities.
Geographically, development remains skewed towards metro areas such as Mumbai and Chennai due to the availability of power, optical fibre networks, and skilled talent. However, these hubs face severe land constraints, pushing new projects to peripheral locations such as Navi Mumbai and beyond. In response, an emerging trend is the development of inland data centres to establish new low-latency corridors across the country.
Despite the immense opportunities, significant headwinds persist. Capital remains a constraint, and the projected demand for power far outstrips current supply plans, posing a long-term risk.
For financiers, the sector's rapid evolution and obsolescence risks make it one of the toughest asset classes to underwrite. Banks struggle to keep pace with technological changes and are often only comfortable providing senior debt for pre-leased assets, while private credit is still playing catch-up.
For investors, the strategic imperative is clear: success requires a deep understanding of the operational and technological layers of the business, moving far beyond a traditional real estate mindset.
The GRI Institute would like to thank everyone who participated in India GRI 2025 and we look forward to seeing you again at our future events.