Residential realty demand to soften in FY26, commercial demand to grow 5 pc
Residential demand in India’s top seven cities is expected to ease 2-4 per cent this fiscal due to a high base effect but premiumisation will continue, a report said on Wednesday.
The report from Crisil Intelligence said that commercial real estate demand is projected to expand this fiscal with demand rising 5-7 per cent and supply increasing 9-11 per cent, fuelled by leasing from global capability centres, flexible workspace operators and the IT/ITeS and BFSI sectors.
The report said that the ease in residential demand follows robust growth over FY22- FY24 and is driven by a high base effect, sharp capital value appreciation and city-specific factors such as higher stamp duty and registration charges.
Despite the slowdown, premiumisation continues, marked by sharp capital value appreciation and larger average carpet areas in new apartments, the report noted.
The firm forecasted capital values to rise a moderate 5-7 per cent this fiscal, down from 13-14 per cent in the previous two fiscals.
Crisil noted that commercial momentum is likely to ease next fiscal because of the high base built over the past four to five fiscals.
The research firm expressed a more optimistic outlook for fiscal 2027, "with demand recovery driven by rising incomes, lower interest rates, and continued infrastructure improvements."
"Overall, the long-term outlook for the Indian real estate market remains positive, with growth and stability to return in the medium term," said Aniket Dani, Director, Crisil Intelligence.
Another recent report noted that conventional office uptake totalled 58.5 million sq ft in 2025, up 7 per cent, while flex space uptake reached 13 million sq ft, about 18 per cent of total leasing.
Office space demand continued to remain diversified in 2025, with around 25 million sq ft of conventional space or 40 per cent of uptake across BFSI, engineering & manufacturing, and consulting firms.
New supply across the top cities rose 5 per cent to 56.5 million sq ft, with Bengaluru, Hyderabad and Pune, together accounting for nearly 70 per cent of completions.
