INDIA Trends and Developments Contributed by: Vivek Chandy, Archana Tewary, Brijita Prakash and Utsav Johri, JSA
ticularly those focused on Grade A office spaces in cities such as Bengaluru, Mumbai and Hyderabad, reflects the continued demand for high-quality office spaces. Going forward, market participants expect the development of retail, logistics and hospitality REITs, which could further increase investment in India’s real estate sector. Global capability centres and data centres A key driver of leasing growth across India has been the conscious policy-driven focus by state govern - ments to encourage global data centres and capabil - ity centres (GDC/GCCs) to set up operations within such states. These policies adopt a multi-pronged approach to attract the setting up of GDC/GCCs, by focusing on development of infrastructure, residential and commercial real estate, and transportation as well as investing in skill development and augmentation of research capabilities. This is a welcome development, as the establishment of GCCs not only increases real estate transactions (commercial and residential) but also benefits local economies in multiple ways. Other industries having a multiplier effect on commercial real estate In some markets, the healthcare sector has also been a key driver of real estate development, and as the healthcare sector sees increasing investments from private equity investors, the same will have a mul - tiplier effect on real estate development as well. In 2025, there has been a continued rise in the prefer - ence for leasing through flexible space operators and co-working providers, a trend that has carried over from 2024. Developers of flexible real estate spaces and co-working spaces anticipate that the total flex - ible workspace stock will nearly double by the end of the 2027 calendar year. Flexible working spaces also provide additional amenities and services that would be attractive to start-ups. Tier II and Tier III cities – the next frontiers of development Immediately prior to the pandemic, the real estate sector in India saw several blockbuster platform deals, in which large developers across the country sold fully developed commercial and retail projects to buyers (often backed by large private equity funds and sovereign funds) or put the assets into listed real
estate investment trusts. In the immediate aftermath of that phase, the developers seem to have reinvested the proceeds from such sales into projects in Tier II and Tier III cities, a welcome move for the real estate industry overall. This trend recognised the satura - tion of real estate projects in some markets such as Mumbai and highlighted the potential for cities such as Pune, Mysore and Visakhapatnam, among others, to be developed into hubs for industries. Tier II and III cities now reportedly account for nearly half of all land acquisitions by developers by area, demonstrating a clear trend for upcoming real estate projects. In these cities, as a natural corollary, the value of residential real estate has also appreciated, reinforcing the mar - ket strength and potential of these cities. Housing demand in India is expected to reach 93 million units by 2036, driven by multiple factors such as a pro - jected shift of a significant percentage of the popula - tion to urban areas, development of metro and rail networks in multiple smaller cities, and improvement in networks and connectivity. Some companies have also publicly announced a stated intention to remain based out of smaller cities to lower the costs of opera - tions, as well as perhaps provide a better quality of life for their employees. However, the fact remains that for tech-driven companies the critical talent pool may still be based out of the major cities, making it necessary to establish operations in these larger cities. As India continues to develop its logistics and infra - structure assets, investments by both domestic and international developers continue to increase in devel - oping warehousing and logistics parks in Tier II and Tier III cities, particularly those that border Tier I cit - ies. This is mainly because warehousing and logistics parks require larger tracts of land at relatively cheaper prices compared to IT/ITeS companies. The National Logistics Policy and its implementation, along with the development of infrastructure in these locations, will positively impact the development of warehouses and industrial projects. Affordable housing in Tier I cities; slum redevelopment projects Even in cities like Mumbai, there is scope for afford - able housing projects, with Navbharat Mega Develop - ers Private Limited (NMDPL) – a joint venture between the government of Maharashtra and the Adani Group
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