Market Radar: India’s Davos WEF Power Play & A Historic EU Trade Pact

EU ‘mother of all deals’ nears, IMF upgrades growth to 7.3%, and office markets hit record highs

January 20, 2026Real Estate

Key Takeaways

India’s macro outlook strengthened significantly with the IMF upgrading FY26 growth to 7.3%, while the EU’s "mother of all deals" approaches a decisive conclusion to link a combined market of 2 billion people.
A systemic presence at Davos has yielded immediate returns, headlined by Maharashtra’s INR 14.5 trillion in investment pledges and Andhra Pradesh securing UAE support for a major food processing hub.
Sectoral confidence hit historic highs as institutional real estate investments surged 88% to a record USD 8.1 billion, mirrored by IHG Hotels’ aggressive plan to triple its India estate to over 400 properties.

The Macro View

India’s Growth Story Gets an Upgrade

The International Monetary Fund (IMF) has revised India’s GDP growth forecast for the 2025-26 fiscal year to 7.3%, up from an earlier estimate of 6.6%. This adjustment reflects stronger-than-expected growth in the third quarter and strong momentum carrying into the fourth.

While the IMF expects growth to moderate to 6.4% in the following two years as cyclical factors wane, inflation is projected to return to target levels, driven by subdued food prices.

The Mother of All Deals

In a move that could redefine global trade, India and the European Union (EU) are on the verge of concluding a historic free trade agreement.

Speaking at the World Economic Forum (WEF) in Davos, European Commission President Ursula von der Leyen described the pact as the "mother of all deals," potentially creating a combined market of 2 billion people and accounting for nearly a quarter of global GDP.

This push aligns with the EU’s broader strategy to reduce global dependencies - a diversification momentum recently highlighted by the signing of a trade agreement with the Mercosur bloc.

Strategic Timeline

Negotiations have now entered a decisive phase, with von der Leyen set to visit India next week to advance the agreement. Underscoring the strategic depth of this partnership, EU leaders, including von der Leyen, will attend India’s Republic Day celebrations on 26 January as Chief Guests.

Beyond traditional trade, the widening scope of these talks now covers energy security, defence, and technology, signaling a long-term geopolitical alignment between the two regions.

Davos Diaries

A Systemic Presence

India’s delegation at Davos this year is its largest ever in terms of state participation, signaling a shift from merely seeking relevance to establishing a systemic presence. The contingent includes four Union Ministers, six Chief Ministers, and over 100 CEOs.

Maharashtra

Chief Minister Devendra Fadnavis announced that the state signed memorandums of understanding (MoUs) worth INR 14.5 trillion (USD 159 billion) on day one alone.

He expects to surpass last year’s pledges, citing an 80% execution rate for investments signed over the last two years.

Andhra Pradesh

Chief Minister N. Chandrababu Naidu stated Andhra Pradesh has attracted 25% of all FDI entering India. His delegation secured support from the UAE to develop a major food processing hub in collaboration with the Dubai Food Cluster, alongside assurances to facilitate investments from 40 Emirati companies.

Jharkhand

Chief Minister Hemant Soren is using the platform to pivot the state from an extractive economy to a value-added one, seeking investments in refining and technology.

Trend Spotlight

Institutional Capital

India’s real estate sector is witnessing a massive influx of capital, headlined by a record USD 8.1 billion in institutional investments in 2025 - an 88% surge from the previous year.

The momentum is further evidenced by renewed activity in public markets; developer K Raheja Corp is reportedly weighing a USD 700 million IPO at a valuation of around USD 7 billion, potentially setting the stage for one of the country’s largest real estate listings.

Office Markets

The office market mirrored the investment surge, recording a historic net absorption of 61.4 million square feet in 2025, a 25% year-on-year increase.

This growth was driven largely by Global Capability Centres (GCCs), which accounted for one-third of all leasing activity, reinforcing India's status as a global enterprise hub.

Bangalore and Delhi NCR remained the top destinations, contributing 23% and 18% to total net absorption respectively.

Hospitality Boom

Echoing the commercial momentum, the hospitality sector is aggressively scaling up. IHG Hotels & Resorts has announced plans to triple its estate in India over the next five years, targeting a portfolio of over 400 hotels to capitalise on rising demand.

Building on a current pipeline of 80 properties in development and a third consecutive year of record signings, the group will also debut its luxury Vignette Collection brand in early 2026 to capture the growing premium market.