2025 to Uncover Fresh Growth Avenues in Tier 2 and 3 Cities for the Indian Real Estate Industry

New Delhi, Dec 16 (NationPress) After experiencing a remarkable surge in 2024 across the residential, office, and industrial sectors, the year 2025 is expected to mark a phase of consolidation and continuous innovation for the Indian real estate industry, as indicated by a report published on Monday.

While the residential and office markets may stabilize after consecutive highs, the demand for industrial and warehousing spaces is projected to gain momentum, driven by an increase in manufacturing output and a flourishing logistics sector, according to the report from Colliers India.

The year 2025 will see rapid urbanization, the completion of crucial infrastructure projects, and the development of industrial corridors, all of which will unveil new growth prospects, especially in tier 2 and tier 3 cities.

In 2024, the total gross leasing across the top six cities reached 47 million square feet by the third quarter, reflecting a remarkable 23 percent year-on-year growth.

On the residential side, with stable interest rates in place, the launches and sales in major cities are likely to conclude this year on a robust note. Average housing prices in the top eight cities have already risen by 11 percent annually in 2024.

The first three quarters of 2024 recorded a 17 percent annual growth in industrial and warehousing demand, accounting for 20.2 million square feet of leasing in the top five cities. Almost half of this leasing activity is anticipated to originate from Delhi-NCR and Chennai.

Institutional investments in Indian real estate continue to reflect a healthy trend in 2024, showcasing sustained investor confidence. Out of $4.7 billion in real estate investments during the initial nine months of 2024, the office and industrial and warehousing sectors together represented over 70 percent of the share.

Driven by domestic growth prospects and long-term returns, institutional investments are projected to reach around $5-6 billion by the end of 2024.

“The year 2025 could present yet another opportunity for various real estate segments to thrive on investor and end-user optimism. Notably, emerging asset classes such as data centres, co-living spaces, and senior housing are expected to experience accelerated growth, mirroring a broader and more consistent shift in demographics and consumer preferences,” stated Badal Yagnik, Chief Executive Officer of Colliers India.

A favorable regulatory landscape and recent initiatives like SM-REITs (Small and Medium REITs) and enhancements to state-specific RERA (Real Estate Regulation and Development Authority Act) regulations have improved transparency and institutionalization within the real estate sector.

Policy frameworks have also fostered a sense of fair pricing across real estate categories, drawing in both developers and investors.

“The leasing activities from both domestic occupants and Global Capability Centres (GCCs) are expected to conclude 2024 on a high note. Residential activity is predicted to align with the levels of 2023, with strong sales across affordable, middle-income, and luxury segments,” the report stated.

—IANS