India’s next real estate cycle will be geographically broader and economically more differentiated than the cycles that preceded it. The largest metros will remain central to national output and institutional real estate, but a wider network of city-regions is beginning to convert connectivity, enterprise and consumption into formal property markets, according to a September 2026 report by CII and Knight Frank.
The report argues that infrastructure creates access; economic depth creates real-estate value. Airports, expressways and industrial-corridor investments expand a city’s economic catchment, but they do not create durable property demand on their own. That demand emerges when connectivity is matched by jobs, enterprise formation, household purchasing power, serviced land, reliable utilities and liveable urban conditions.
India’s urban economy is now too large to be absorbed by eight metropolitan markets alone, the report says. Around 597mn people live in urban India, contributing 60% of national GDP; the urban population is expected to reach about 740mn by 2050. The next phase of urbanisation will be distributed across city-regions with distinct economic roles: manufacturing and export centres, logistics nodes, regional capitals, education and healthcare hubs, and tourism- and consumption-led markets.
The early evidence is visible but uneven. Residential and warehousing are decentralising first, supported by household demand and national production networks. Retail is following consumption, while office demand is widening selectively through GCCs and regional employment clusters. Institutional capital remains concentrated, making formal, income-producing supply the next test of market maturity.
India’s real-estate sector is estimated at $613bn in 2025. Emerging city-regions outside the top eight account for around 15%, or $92bn, of this output. By 2047, the national real-estate market is projected to reach $5.8 trillion. If employment, formalisation, consumption and urban capacity spread alongside infrastructure, Tier-2 and Tier-3 cities could raise their share to 25–30%, creating a $1.4–1.7 trillion real-estate opportunity.
This is a conditional outcome, not a linear extrapolation, the CII and Frank Knight report says. The conservative case is one in which residential and warehousing decentralise, while office, retail and institutional capital remain metro-led. The stronger case requires public investment to crowd in private capital, formal supply to follow demonstrated demand, and city governments to expand the capacity to accommodate growth. India’s next real-estate cycle will not be written in every Tier-2 or Tier-3 city. It will be written in city-regions where connectivity translates into jobs, enterprises, household demand and investable assets. The opportunity is to identify those markets before their economic transition is fully reflected in land values, supply pipelines and institutional capital allocation.
While the CII-Knight Frank report expects the current real estate cycle to broaden beyond the major metropolitan markets, the top cities are likely to continue recording healthy growth. ICRA projects sales value in India’s top seven cities to expand 8-11% in 2026-27, supported by higher property prices and a favourable sales mix. This compares with an expected 2-5% increase in the area sold. When it comes to the medium-term outlook, sales value is estimated to grow at a CAGR of 7-9%, while sales volumes measured by area are forecast to remain mostly unchanged.
Area sold across the seven cities grew 1.5% y/y to 653mn square feet in 2025-26, despite a high base and a slowdown in project launches for much of the year, ICRA said. Launch activity increased 5% y/y during the first nine months of 2025-26 before accelerating to 18% y/y growth in Q4.
Demand remained particularly strong in the luxury segment, where area sold increased 14%, while the mid-income segment recorded 2% growth. Affordable housing, however, saw area sales decline 9%. In Q1 2026-27, area sold rose 9% y/y, largely supported by the strong pipeline of projects launched in Q4 2025-26.
Anupama Reddy, Group Head and Vice President – Corporate Ratings at ICRA, expects housing sales across the top seven cities to total 665-685mn square feet in 2026-27. She attributed the projected volume to continued demand for mid-income and luxury homes, alongside buyers’ increasing preference for established listed developers.
Launches are forecast to increase 4-7% to 760-785mn square feet, supported by comfortable inventory levels, Reddy said.
“Average selling prices are likely to witness a moderate 4-7% rise, following a sharp appreciation seen over the last few years. Although sales velocity has softened from the peak levels, developers' calibrated approach to launches is expected to maintain a healthy market balance, with the years-to-sell ratio remaining comfortable at 1.4-1.6 times by March 2027,” she said.
The mid-income and luxury housing segments account for 34% and 46%, respectively, of total sales volumes in 2025-26. This indicates that the market for residential units is witnessing steady premiumisation. The shift is also visible in the inventory mix, with unsold stock increasingly concentrated in these segments, while the share of affordable housing has declined.
The years-to-sell ratio increased marginally to 1.4-1.5 years, suggesting that inventory additions remain broadly aligned with underlying demand, the ICRA report added.