What are the top strategies for real estate investment in 2025?

Bricksnwall Trusted Experts

With record-breaking leasing and sales as well as a growing desire for new launches, India's real estate sector ended another successful year. Due to strong momentum in residential real estate and high inflows into commercial areas, equity investments in the industry are expected to reach USD 10 billion by 2024.

2025 promises to offer more innovation and resilience with these good changes. Let's examine five major themes that might shape the upcoming year.

The housing market is being driven by high demand

The housing market in India is more robust than before. Over 229,900 units were sold in the top seven cities between January and September 2024, representing a notable 60% increase from 2019 and a 17% increase from 2023. 2. Premium housing will account for 16 percent of demand in 2024, up from just 6 percent in 2019, demonstrating the dominance of the mid- and high-end segments. 3. It is anticipated that the luxury and ultra-luxury housing categories would continue to rise at a greater rate than affordable housing.

Integrated townships, which provide cutting-edge amenities and a community-focused lifestyle, are likewise becoming more and more popular. Nowadays, buyers are looking for tech-enabled homes with cutting-edge features like automatic lighting, AI-driven security, and sustainable energy options. Additionally, the idea of intergenerational living is becoming more popular.

Growing the office sector

Investor confidence is maintained by the Indian economy's resilience in the face of global uncertainty. The office market in India is similarly optimistic, with gross leasing reaching a record 53.4 million square feet between January and September 2024. 4 This growth is being driven by important industries including manufacturing, engineering, BFSI, and IT. Additionally, India has established itself as a GCC centre.managing more than 1,700 facilities around the country. Five With a compound annual growth rate (CAGR) of over 11% in 2024, the GCC market greatly boosted the office market. Six Leasing activity is concentrated in traditional hubs like Bengaluru, Delhi NCR, and Mumbai, but tier-2 cities are also showing promise. The market is shifting more and more in favour of high-tech, environmentally friendly grade-A office buildings with AI-powered workplace management tools, smart building technologies, and energy-saving systems. 

Adoption of the "Core + Flex" paradigm and flexible office spaces are still popular. There has been a steady increase in demand for office space as more workers return to their jobs. As a result, overall vacancy rates have decreased by 17%, the lowest level seen in 14 quarters. 7. According to KPMG India's CEO Outlook, 78% of Indian CEOs expect to work in offices again within the next three years. In light of this, a consistent growth in commercial real estate is anticipated in 2025.

Spending more money is helping India's retail and hospitality industries

India's retail industry is booming due to rising consumer expenditure, which hit USD 1.29 trillion in 2024. 8. By the end of the year, leasing activity is expected to reach 6.5–7 million square feet, led by industries like entertainment, gastronomy, and fashion. 9. Malls are becoming into experiencing centres that provide much more than just retail. A varied clientele is being drawn in by cutting-edge features like community areas and family entertainment areas. It is anticipated that a major trend in 2025 will be the growing consumer desire for experiential retail. 

Positive developments in hospitality have been observed in the rise of corporate travel and domestic tourism. In 2024, for example, the branded and organised hotel industry had a decade-high occupancy rate of 67.5%, indicating robust demand. 10. All things considered, the hotel industry received USD 93 million in investment inflows in the first half of 2024 and is expected to reach USD 413 million by the end of the year, a 22% increase over 2023. 11. These industries are anticipated to be further driven as 2025 approaches by growing urbanisation trends, changing lifestyles, and increased disposable incomes.

The building industry is driven by the expansion of infrastructure

With government capital expenditures rising sharply from INR5 lakh crore in 2021–2022 to INR11.11 lakh crore in 2024–2025, India's infrastructure is still expanding rapidly. Twelve This investment, which is concentrated on roads, railroads, and aircraft, is changing the industrial and urban environment of the nation. In the past ten years, for example, the national highway system has grown by 1.6 times, more than 1,300 train stations have been updated, and more than 84 airports have been put into service. 

all having an impact on the real estate markets. 13. Due to increased connectivity, tier-2 and tier-3 cities are becoming hotspots with high real estate demand. With a 25% year-over-year increase in H1 2024, the logistics and industrial sector has also experienced remarkable growth. 14 In light of these developments, there is a growing need for satellite townships close to important infrastructure hubs. The relationship between real estate and infrastructure development will only get stronger in the future due to the continuous capital expenditure push, opening up chances in the commercial, industrial, and residential sectors.

Growing interest in new investment opportunities

Due to shifting consumer tastes and demographics, investments in the industry are moving beyond conventional models and gaining popularity in alternative asset classes like data centres, co-living facilities, and senior housing. For example, by the end of the year, India's data centre capacity, which is currently 1,255 MW, is anticipated to increase to 1,600 MW.

The capacity is expected to rise by 66% during the following two years. 16 The sector's transparency and general institutional appeal are also being greatly enhanced by new investment opportunities and a significantly better regulatory environment. The momentum is anticipated to increase with recent actions, such as the implementation of Small and Medium REITs and the new RERA regulations. All things considered, India's standing as a worldwide hub for real estate investment is growing as record institutional investments pour into the industry. We can expect more creative financing options to develop in the Indian industry in 2025. It is anticipated that this diversification, together with developments in sustainability and technology, will draw additional capital into the industry. 

2025 looks to be another revolutionary year for the Indian real estate market, which is expanding at a compound annual growth rate (CAGR) of more than 9%, as the country embraces innovation, sustainability, and urbanisation. 17 The industry is expected to contribute double digits to India's GDP and can serve as a key pillar for the realisation of Viksit Bharat thanks to a promising economic growth prognosis, investor confidence, and a constantly changing customer base.