New Delhi [India], August 20 : India's real estate sector is expected to remain resilient through 2026, supported by strong demand, healthier developer balance sheets, sustained office leasing and structural growth in manufacturing and warehousing. However, prolonged geopolitical uncertainty and elevated crude oil prices could raise construction costs and put pressure on affordability and developer margins, according to a report by CareEdge Ratings.
The report said the impact of the West Asia crisis has been uneven across real estate segments. While affordable housing and project execution have faced greater cost pressures, office leasing has remained resilient on the back of Global Capability Centre (GCC) demand, while industrial and warehousing activity continues to benefit from e-commerce, logistics and manufacturing growth.
CareEdge expects residential sales in the top six cities to remain broadly range-bound at around 3.55 lakh units in CY2026. Premium and luxury housing is likely to remain relatively resilient, supported by high-net-worth individuals, affluent buyers and non-resident Indians, while affordable housing could face pressure from elevated inflation, interest rates and construction costs.
The shift towards premium housing has already become pronounced. Homes priced above Rs 1.5 crore accounted for 53 per cent of new residential launches in the top seven cities in Q1 2026, compared with 43 per cent a year earlier. Meanwhile, the share of homes priced below Rs 1.5 crore declined to 47 per cent from 57 per cent.
Office real estate remains a key bright spot. Gross office transactions reached a record 29.9 million square feet in Q1 2026, up 6 per cent year-on-year, with GCCs accounting for 48 per cent of total transactions. CareEdge expects Grade A office absorption in the top six cities to exceed 90 million square feet in CY2026, although prolonged uncertainty could delay expansion decisions by multinational companies.
The sector also attracted $3.5-4 billion in institutional investment during H1 2026, the highest first-half inflow since the COVID-19 pandemic. Investment rose 90 per cent quarter-on-quarter to $2.65 billion in Q2.
CareEdge noted that leading residential developers have significantly strengthened their balance sheets, with the debt-to-collections ratio declining to 0.68 times in FY26 from 1.80 times in FY20. This provides larger developers with greater resilience against higher costs and financing volatility, although smaller and highly leveraged players remain more vulnerable.