Market Radar India: US-Iran war triggers industry appeal for regulatory relief

CREDAI appeals for RERA extensions amid US-Iran war

The escalating geopolitical tensions between the United States and Iran are casting an increasingly significant shadow over the global economy, placing India at a critical crossroads as the conflict intensifies and its repercussions spread across multiple sectors.

For India’s real estate industry, the effects are already becoming visible through mounting macroeconomic pressures, operational uncertainty, and the growing need for both diplomatic balancing and domestic economic resilience.

At a national level, the Indian government has introduced a series of austerity measures aimed at reinforcing economic stability as the geopolitical crisis intensifies, including increases in petrol and diesel prices, tighter restrictions on gold imports, and a temporary ban on sugar exports to safeguard domestic supply. 

According to recent reports, these initiatives are intended to preserve fiscal discipline and protect the economy from rising energy costs and heightened volatility across global markets.

To mitigate the risk of capital outflows, authorities are also considering reductions in taxes on bond investments for foreign investors in an effort to sustain foreign currency inflows and maintain the competitiveness of Indian debt markets during a period of elevated global risk aversion.

The diplomatic landscape remains equally complex. The recent BRICS foreign ministers’ meeting in New Delhi exposed significant divisions within the expanded bloc, concluding without a joint declaration as member states clashed over the conflict involving the United States, Iran, Israel, and the United Arab Emirates (UAE).

Faced with competing calls for condemnation from both Iran and the UAE, India adopted a carefully neutral Chair’s Statement centred on sovereignty, civilian protection, and safeguarding maritime trade through the Strait of Hormuz, while continuing to preserve its strategically balanced relationship with Tehran.

Although a unified position proved unattainable, Prime Minister Narendra Modi’s visit to Abu Dhabi reinforced India’s commitment to its regional partnerships, during which he explicitly condemned attacks on the United Arab Emirates (UAE). 

The visit also resulted in both countries agreeing on a framework for a strategic defence partnership, aimed at strengthening regional security while deepening cooperation in technology sharing and innovation amid continued tensions across the Middle East.

The real estate sector, a key pillar of the Indian economy, has emerged as one of the most exposed industries amid the regional instability. Industry leaders have warned that the conflict is driving up construction and labour costs, while supply chain disruptions are placing increasing pressure on project margins and execution timelines.

In response to these mounting challenges, the Confederation of Real Estate Developers' Associations of India (CREDAI) has approached the Ministry of Housing and Urban Affairs with an urgent request for regulatory relief.

The industry body is seeking a formal directive allowing Real Estate Regulatory Authority (RERA) agencies to grant project extensions of three to six months. 

Developers argue that the current operating environment represents a force majeure-type disruption beyond their control, affecting everything from material procurement to the availability of specialised labour.

As the situation continues to evolve, India’s corporate sector is preparing for an extended period of uncertainty. The combination of government-led fiscal caution and industry appeals for regulatory flexibility reflects a market adopting a defensive yet proactive stance. 

For stakeholders across the property sector, the priority remains resilience, with expectations that targeted policy interventions will provide the necessary breathing space to navigate these global headwinds. 

Has India lagged behind in the global AI race?

The narrative surrounding India’s position within the global artificial intelligence (AI) sector is entering a more nuanced and strategic phase. 

Recent market analyses have raised concerns that India may have missed the first major wave of the global AI investment cycle, potentially weakening its long-standing position as one of the preferred destinations for emerging market capital. 

As AI-driven rallies increasingly propel markets such as Taiwan and South Korea, global investors are shifting their focus towards semiconductor manufacturing, computing infrastructure, and foundational AI technologies - areas in which India has historically maintained limited exposure. 

The country’s technology sector, long associated with IT services and digital outsourcing, is now facing mounting pressure to evolve beyond traditional service models as the global AI economy becomes increasingly centred on hardware, advanced computing capacity, and proprietary AI ecosystems. 

However, rather than signalling structural decline, this shift appears to be accelerating India’s transition towards a more comprehensive AI and deep-technology strategy. The country is increasingly repositioning itself from a predominantly service-led economy into a critical hub for AI infrastructure and specialised talent development.

A central pillar of this transformation is the recently announced partnership between Tata Electronics and ASML, as the companies collaborate on India’s first commercial semiconductor fabrication facility to address long-standing gaps in the country’s technology supply chain. 

ASML’s chipmaking technology will support Tata Electronics’ planned 300-millimetre semiconductor fabrication plant in Dholera, Gujarat, a project involving approximately USD 11 billion in investment and aimed at producing chips for applications ranging from automotive and mobile devices to AI.

At the same time, the digital infrastructure required to sustain large-scale AI adoption is expanding rapidly. Microsoft has confirmed that its largest data centre campus in India remains on track to become operational by mid-2026, significantly increasing domestic cloud capacity and reducing latency for AI-powered services. 

Confidence in this long-term infrastructure story is also being reflected across both private and public capital markets, highlighted by STT Global Data Centres’ planned USD 500 million initial public offering (IPO). These investments demonstrate growing investor conviction in the physical infrastructure underpinning the broader digital economy.

The rise of AI is also reshaping India’s corporate environment and labour market dynamics. Major enterprise software providers such as Workday have reaffirmed their long-term commitment to the country by expanding AI-focused product development and strengthening local workforce capabilities. 

While early market enthusiasm surrounding India’s AI opportunity may be undergoing a period of recalibration, the country continues to strengthen several of the structural foundations required to participate more competitively in the global AI economy - suggesting a broader effort to expand beyond its traditional IT services base.

India records modest housing sales despite 2.2% annual decline

According to recent data from PropTiger, housing sales across India’s eight largest cities recorded a modest year-on-year decline of 2.2% during the January to March 2026 period, reaching approximately 95,973 units. 

At the same time, new residential launches remained broadly stable at 93,065 units, signalling a market undergoing a phase of healthy normalisation rather than structural weakness.

Quarter-on-quarter, both demand and supply continued to expand moderately, with sales increasing 1% and new launches rising 1.1%. The close alignment between fresh supply and sales absorption also helped maintain broadly balanced unsold inventory levels, preventing any significant build-up of excess stock across the country’s principal residential markets.

Pricing trends remained firmly positive across all eight cities surveyed. Average residential values appreciated in every major market, ranging from 3.4% annual growth in Chennai to a substantial 24.2% increase in Bangalore. 

Significantly, India’s weighted average residential price surpassed the INR 10,000 per square foot threshold for the first time, reaching approximately INR 10,050 per square foot - a milestone that further reflects the ongoing premiumisation of the country’s housing market.

Alongside the sales market, the residential rental sector also maintained strong momentum during the quarter. According to the latest Magicbricks Rental Index, average residential rents increased 14% year-on-year and 2% quarter-on-quarter between January and March 2026.

Rental demand rose modestly by 0.6% sequentially, while supply expanded more sharply, increasing 9% quarter-on-quarter and 12% year-on-year, driven largely by project completions and handovers across emerging residential corridors. 

The INR 10,000 to INR 20,000 monthly rental segment accounted for the largest share of tenant demand at 36%, followed by the INR 20,000 to INR 30,000 segment at 22%. Two-bedroom apartments continued to dominate the market, representing 45% of total rental demand, while semi-furnished homes remained the preferred format for both tenants and landlords.

Bangalore recorded the strongest rental performance among India’s major cities, with demand increasing 5.2% quarter-on-quarter and rents rising 8.6% sequentially, supported primarily by activity across technology-led employment corridors.

This broader market resilience is being accompanied by a significant strategic shift towards luxury and ultra-luxury residential development. Leading developers are increasingly repositioning their portfolios to capture rising demand within premium housing segments.

DLF, for instance, is targeting residential sales bookings of approximately INR 200 billion in FY27, supported by an extensive luxury-focused launch pipeline across Gurugram, Goa, and Mumbai. 

Similarly, NeoLiv announced its expansion into Maharashtra through the acquisition of a 76-acre land parcel in Khopoli for a luxury villa and residential development project.

Meanwhile, a luxury real estate investment platform backed by India Sotheby's International Realty and ASK Property Fund has launched operations with an initial INR 630 million investment into an ultra-luxury villa development in Goa, further underlining investor appetite for high-end residential assets.

Karyan Group also announced plans to invest approximately INR 9 billion into a luxury residential project in Ghaziabad, Uttar Pradesh. The development will comprise 608 homes and penthouses across approximately 1.6 million square feet, with units priced between INR 20 million and INR 60 million.

In parallel, Signature Global revealed plans to invest approximately INR 35 billion during FY27 on land acquisitions and construction activities, primarily focused on the Gurugram market, while targeting residential sales bookings of around INR 100 billion during the current fiscal year.

Institutional capital also continues to flow into emerging residential markets. Investment firm WSB Partners has committed INR 750 million alongside Omaxe Limited to support plotted residential developments in Ujjain and Indore, highlighting sustained investor confidence in Tier 2 and Tier 3 cities.

At the same time, Brigade Enterprises indicated that it will maintain an active project launch pipeline through FY27 while increasing its focus on mid-segment housing across Southern India, as affordability considerations continue to shape buyer preferences.

Despite moderating sales growth, these trends point towards an increasingly diversified residential market capable of serving a broad range of buyer profiles and investment strategies - supported by disciplined supply, stable pricing momentum, rising rental demand, and sustained institutional interest across both premium and mid-income segments.
 

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