India’s real estate sector, particularly in its top seven metropolitan cities, is poised for a rebound in new launches, following a temporary slowdown in FY25. According to a recent ICRA report, new real estate project launches are projected to grow by 6–9% year-on-year, reaching between 620–640 million square feet (sq ft) in FY26. This anticipated growth comes after a decline in FY25, which was attributed primarily to delays in project approvals.

FY24: A Record Year for Launches

In FY24, India’s top real estate markets witnessed a record-breaking 701 million sq ft of project launches. This figure marked a significant achievement for the sector, buoyed by rising consumer demand and favourable macroeconomic factors.

However, FY25 saw a temporary pullback, with launch activities slowing down due to regulatory and approval-related bottlenecks. But this slowdown is expected to be short-lived, as developers prepare to launch a fresh wave of projects aligned with buyer preferences.

Affordability Pressures Due to Price Rises

Between FY23 and FY25, average selling prices across key markets rose by 17–21%, according to ICRA. This uptick raised affordability concerns among potential buyers, especially in middle-income segments. However, despite these concerns, demand has remained resilient, thanks to strong consumer sentiment, healthy income levels, and the availability of financing options.

Unsold Inventory at Healthy Levels

One of the most encouraging signs for the real estate sector is the low level of unsold inventory. Unlike in previous cycles where excess supply was a concern, the current market is being driven by more realistic supply planning and buyer-centric launches.

The replacement ratio, which is calculated as new launches divided by area sold, stood at 1x in Q3 FY25, suggesting a balanced market. This ratio is expected to remain stable in the near future, ensuring that launches do not significantly outpace demand.

Interest Rate Cuts May Boost Sentiment

A critical factor that could influence buyer sentiment in FY26 is the expected easing of interest rates. As per ICRA, there is a strong possibility that the Reserve Bank of India (RBI) may initiate a 25 basis point repo rate cut in early 2025, followed by an additional 50 basis point cut during FY26.

Such monetary easing would translate into lower home loan interest rates, making property purchases more affordable for consumers. Alongside this, reduced income tax outflows, particularly through tax-saving instruments, are also expected to support housing affordability and improve buyer confidence.

FY25: Short-Term Weakness Before Recovery

While FY25 is expected to witness a 4–7% decline in total area sold, amounting to approximately 650–670 million sq ft, this dip is largely seen as temporary. Developers and analysts alike believe that the real estate sector will recover strongly in FY26, backed by the return of launch momentum and macro-stability.

Furthermore, increased transparency, RERA compliance, and the shift towards digitised approval systems across several states are contributing to smoother execution and reduced delays in project rollouts.

Strong Medium-Term Outlook

The medium-term outlook for India’s real estate sector remains stable and promising, thanks to several key drivers:

• Robust demand across segments, especially affordable and mid-income housing

• Healthy financial health of leading developers

• Growing urbanisation and infrastructure investments

• Continued preference for home ownership over rentals, particularly in post-pandemic India

Changing Buyer Preferences Shaping Launches

Consumer preferences have also evolved in recent years. There is a noticeable shift towards:

• Larger apartments with flexible layouts

• Properties with dedicated work-from-home spaces

• Integrated townships with amenities and green spaces

• Increased focus on sustainability and smart-home features

Developers are responding accordingly by designing new launches that cater to these emerging demands, thereby ensuring that project inventory remains relevant and desirable.

Conclusion: Resilience, Recovery, and Renewal

In summary, the Indian real estate sector’s trajectory over the next fiscal year reflects resilience in the face of challenges, recovery from temporary headwinds, and renewed focus on demand-driven growth. With launches projected to increase by up to 9% in FY26, and several supportive macroeconomic factors in play, the sector is well-positioned to reclaim its growth momentum.

As India’s top cities continue to urbanise and infrastructure improves, the real estate ecosystem is expected to witness more balanced supply, better affordability, and a stronger regulatory environment—laying the groundwork for sustainable long-term growth.

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