Real estate sector set for premium and luxury housing boom in 2026

Tier-2 cities like Mysuru, Coimbatore, Kochi, and Vijayawada are likely to witness demand for premium residences and Grade A office space

Bengaluru: The real estate industry is set to witness a strong end-user demand in 2026. The sector is shifting from opportunistic growth to institutional discipline, with data integrity, design innovation, and capital-market maturity emerging as the new competitive edge. Premium and luxury housing segments will continue to outpace affordable housing, now contributing over 50 per cent of sales value in top metros.

“Higher-income buyers are prioritising lifestyle upgrades and remain less sensitive to cycles. Supply-constrained micro-markets like Whitefield and ORR in Bengaluru, Gurgaon Golf Course Road, and West Hyderabad are expected to hold pricing power,” said Sunil Pareek, Executive Director, Assetz.

He said the GCC ecosystem—now ~540 centres in Bengaluru—is becoming a meaningful home-buying force. Salary growth of 12–18 per cent among mid-senior professionals is driving upgrades, second homes, and investment-led purchases. This creates a steady, resilient demand base.

Listed residential players have delivered 25–40 per cent CAGR in pre-sales since FY21, signalling sustained investor confidence. 2026–27 is likely to see residential IPOs as platforms institutionalise governance, build scale and systems. The residential sector is slowly building a distinct capital-market identity, independent of commercial REIT structures.

Less than 20 per cent of developers today have active tech architectures. In 2026, AI-led planning, digital twins, automated MIS, and CRM/cashflow engines will start moving towards enterprise core systems. PropTech investment has grown 5x since 2020; hence, 2026 will see its consolidation into credible enterprise platforms, Pareek said.

“Virtual tours, e-contracts, and AI-led assistance will now be standard expectations rather than differentiators. Post-handover digital platforms improve resident satisfaction and reduce service bottlenecks. End-to-end digitisation is becoming a key lever for trust and transparency,” he said.

The year 2026 is expected to be a year of consolidation and calibrated growth. Residential demand should remain resilient, supported by premiumisation, larger homes, and infrastructure-led urban expansion, said Shekhar Patel, President, CREDAI.

“The priorities are clear: smoother transmission of repo rate cuts, further simplification of GST, faster approvals, and improved access to long-term capital. With a clearer policy framework and continued government–industry collaboration, Indian real estate is well positioned to attract both domestic and foreign capital and reinforce its role in economic growth, employment creation, and long-term urban development,” he said.

Ashish Puravankara, MD, Puravankara Limited, said, “As we look ahead to 2026, three signals stand out clearly. First, growth will be led by discerning customers who prioritise product quality, readiness, and trust in the developer. Second, capital deployment - both domestic and global - will become sharper and more selective, favouring developers with strong governance and disciplined balance sheets. And third, technology and sustainability will increasingly shape how we plan, build, and deliver. ESG adoption, modular construction, and digital tools are no longer optional; they are central to future-proofing the industry.”

According to Murali Malayappan, Chairman & Managing Director, Shriram Properties Limited, the year 2025 marked a decisive shift in homebuyer preference towards large, trusted developers, further accelerating consolidation in the real estate sector. The mid-market and mid-premium segments witnessed strong momentum fuelled by aspirational younger buyers seeking ‘premiumisation’ superior amenities, curated community experiences, and enhanced lifestyle value.

“Looking ahead, 2026 is poised for accelerated growth, driven by operational efficiency, digital integration, and strengthening demand, especially in the Southern markets. Sustainability will become a mandatory market standard, with wider adoption of green building practices,” he said.

Added Pavitra Shankar, MD, Brigade Enterprises Limited, “In 2025, the real estate sector in our country demonstrated remarkable stability and depth, strengthened by institutional investments of around $5–7 billion. All segments (residential / commercial / hospitality) anchored this growth, reflecting sustained investor confidence and the ability of the sector to adapt to changing market dynamics, regulatory reforms, and improving infrastructure landscapes”.

Urban renewal, high-quality residential developments, and more technology-driven construction models will shape the next leg of progress in 2026. The demand for residential properties will also remain strong with customers prioritizing delivery, transparency, and trust thereby giving organised developers a clear advantage. Furthermore, demand for Grade-A office spaces will continue to be resilient, whether in the traditional leasing or flex space model, reaffirming India’s position as a global business hub despite uncertainty on tariffs, she said.

“We will also see an increase in demand for premium residences and grade A office spaces in Tier-2 cities like Mysuru, Coimbatore, Kochi, Vijayawada, etc,” she said.

Ramani Sastri - Chairman & MD, Sterling Developers, said the recent rate cut has also aided in strengthening market confidence and serves as a strong signal of policy support for the real estate sector and the broader economy and will play a crucial role in sustaining homebuyer confidence in the coming year.

“As India's economy continues to grow, there is an increasing interest among the homebuyers to continue to invest in residential real estate for long-term returns. While the residential real estate sector continues to show robust performance in 2025, we definitely hope to see lower interest rates next year which will help drive growth. The Indian real estate market is on an upward trajectory and the sustained demand will solidify the sector's position well into 2026,” he said.

Aparna Reddy, Executive Director, Aparna Enterprises Ltd, said, “In 2025, India’s construction and building materials sector operated with steady confidence, supported by stabilising demand and a clear shift toward higher-performance and sustainability-focused material choices. Over the course of the year, this confidence has translated into consistent expansion across housing, commercial development and infrastructure, moving the industry firmly beyond recovery. Market indicators reflect this momentum, with the construction sector on track to grow at over 11 per cent annually and reach a value of nearly Rs 25 lakh crore by FY26, reinforcing its role as a long-term economic contributor.”

Ramji Subramaniam, Managing Director, Sowparnika Projects, said the year 2025 has been a defining one for the real estate sector, especially in Bengaluru’s aspirational and mid-segment housing. “We have witnessed sustained demand in micro-markets such as Hoskote, Sarjapur Road, and Whitefield, driven by strong infrastructure developments, new employment hubs and tech parks, healthy rental yields, and improved mobility. First-time homebuyers and young families continue to dominate this segment, choosing projects that combine affordability with modern, lifestyle amenities,” he said.

He said the preference has shifted toward homes that offer an aspirational upgrade, without compromising on accessibility or affordability. The prices of 2 and 3 BHK apartments have increased by nearly 40 per cent, rising from Rs 65 lakh in 2022 to Rs 95 lakh in 2025. “As we look ahead to 2026, we anticipate the mid-segment to remain the backbone of residential demand,” he said.

Kishan Govindaraju, Executive Director, Vaishnavi Group, said: “The year-end is traditionally an opportune time for homebuyers to invest in property, benefiting both buyers and developers. While homebuyers gain from attractive deals, flexible payment plans, and tax advantages before the financial year closes, developers are able to accelerate sales and clear inventory to meet annual targets. The momentum that begins during the festive season continues through year-end, supported by improved buyer sentiment, bonus payouts, and rising disposable incomes. This period creates a win-win scenario — empowering buyers to make strategic investments and enabling developers to strengthen cash flows.”

The future of real estate lies in long-term value creation rather than short-term volumes. Developers who combine disciplined execution with professionally managed communities will define the next phase of growth, said D Kishore Reddy, Chairman and Managing Director, Mana Projects.