India’s real estate sector is set for a significant upswing in 2025, driven by regulatory reforms, sustained investor confidence, and shifting market dynamics. Recent initiatives like Small & Medium REITs (SM-REITs) and refined state-specific RERA regulations have enhanced transparency, attracting domestic and global investors.

Colliers India’s 2024 round-up highlights robust performance across asset classes. Grade A office space leasing in major cities like Bengaluru and Hyderabad has reached record highs, fueled by demand from BFSI, engineering, manufacturing, and Global Capability Centers (GCCs). “The resilience of India’s business ecosystem is evident in the strong leasing activity,” noted Navin Makhija, MD, The Wadhwa Group. The residential segment also saw healthy sales in affordable, middle-income, and luxury categories, while industrial and warehousing demand remained strong, led by Third Party Logistics (3PL) and engineering firms.

2025: Consolidation and Innovation

Looking ahead, 2025 is poised to be a year of consolidation and growth. The industrial and warehousing sector is expected to gain momentum, driven by rising manufacturing output and a thriving logistics industry. Alternative asset classes, including data centres, co-living, and senior housing, are also anticipated to grow rapidly. “2025 could be a standout year for multiple real estate classes, with optimism from investors and end-users alike,” said Badal Yagnik, CEO of Colliers India.

Tier II and III cities will likely emerge as hotspots, supported by infrastructure projects and urbanisation. Cities like Indore, Coimbatore, and Bhubaneswar are attracting businesses due to lower operating costs and the availability of skilled talent. Leading developers are expected to capitalise on this trend by expanding their presence in these markets with Grade A developments.

Office Market: A Bright Future

The office real estate segment is on track to solidify its position after achieving record leasing activity in 2024. Annual leasing volumes surpassed 47 million sq ft by Q3, with Grade A office space absorption projected to reach 60 million sq ft by year-end. Demand from BFSI and engineering sectors is expected to drive 35-40% of office space leasing in 2025, while GCCs are poised to account for nearly 50% of activity, thanks to focused state policies like Karnataka’s GCC initiative.

Flex space adoption continues transforming the commercial landscape, with operators accounting for 20% of leasing activity. The ‘Core + Flex’ model is gaining traction as companies seek cost-effective, flexible leasing solutions. Tier-II and III cities will see a surge in flex space adoption as operators expand portfolios and explore asset-heavy models.

Sustainability and Green Building Practices

Sustainability is at the forefront of new developments, with nearly 80% of the upcoming supply expected to be green-certified. LEED and GRIHA-certified buildings are becoming industry standards, driven by operational efficiency and compliance pressures. Existing office stock also holds potential for eco-compliance upgrades with minimal investment, reinforcing the sector’s focus on sustainable growth.

Conclusion

As India’s real estate market evolves, its adaptability and growth across asset classes demonstrate its critical role in its economic trajectory. With innovative trends, regulatory reforms, and a focus on sustainability, 2025 promises to be a transformative year for the sector.