Real Estate emerges as a stable, yield-oriented asset for 2026, says Knight Frank’s Vivek Rathi

The Indian real estate sector, often considered a bellwether for the broader economy, is projected by Knight Frank's Vivek Rathi to emerge as a stable, yield-oriented asset by 2026. This outlook signifies a maturing market capable of outperforming other asset classes, driven by fundamental demand and evolving investment patterns. Understanding this projection requires delving into the sector's background, its key drivers, regulatory landscape, and its profound implications for India's economic trajectory.

Historically, Indian real estate has been characterized by cycles of boom and bust, often influenced by speculative investments, policy uncertainties, and credit availability. Post-liberalization in 1991, the sector saw significant growth, attracting both domestic and foreign investment. However, it also faced challenges like lack of transparency, delayed projects, and opaque transactions, which sometimes eroded investor and buyer confidence. The last decade, particularly post-2016, witnessed a transformative shift with landmark policy interventions aimed at formalizing and regulating the sector.

What is happening now is a consolidation and professionalization phase. The projection for 2026 points to several key growth drivers. Premium housing continues to see robust demand, fueled by rising disposable incomes, aspirations for better living standards, and a flight to quality post-pandemic. Equally significant is the strong performance of industrial and warehousing segments. The e-commerce boom, coupled with the government's push for manufacturing and logistics infrastructure (like the National Logistics Policy, 2022), has spurred massive investment in Grade A warehousing facilities across major consumption hubs. Furthermore, the rise of fractional ownership models is democratizing real estate investment, making it accessible to a wider pool of smaller investors who can own a share of high-value commercial or residential properties without the need for substantial upfront capital. This innovation enhances liquidity and broadens the investor base, contributing to market stability.

Key stakeholders in this ecosystem include the government (both central and state), real estate developers, financial institutions (banks, Housing Finance Companies), homebuyers, investors (domestic and foreign), and a vast workforce involved in construction. The government plays a pivotal role through policy formulation, infrastructure development, and regulatory oversight. Developers are crucial for supply creation and project execution. Financial institutions provide the necessary capital and home loans, while buyers and investors constitute the demand side. The sector is the second-largest employer in India after agriculture, providing direct and indirect livelihoods to millions.

This positive outlook for real estate matters immensely for India. Economically, a stable and growing real estate sector contributes significantly to the nation's GDP (estimated to be around 7-8%), acts as a major driver for over 250 ancillary industries (cement, steel, electricals, etc.), and generates massive employment. It's integral to India's ambition of becoming a $5 trillion economy. Socially, it addresses the critical need for housing, especially with initiatives like the Pradhan Mantri Awas Yojana (PMAY), launched in 2015, aimed at achieving "Housing for All." A thriving sector also facilitates urban infrastructure development, supporting the Smart Cities Mission (2015) and promoting planned urbanization.

The regulatory framework has been crucial in shaping this stability. The **Real Estate (Regulation and Development) Act, 2016 (RERA)**, is a landmark legislation that brought much-needed transparency, accountability, and consumer protection to the sector. It mandates registration of projects and agents, specifies timelines for project completion, and establishes a grievance redressal mechanism, significantly boosting buyer confidence. Furthermore, land, being a 'State Subject' as per **Entry 18 of the State List in the Seventh Schedule of Article 246** of the Constitution, means state governments have substantial powers over land acquisition, use, and transfer. The **Right to Property**, once a Fundamental Right under Article 31, was made a constitutional right under **Article 300A** by the 44th Amendment Act, 1978, impacting how land is acquired for public purposes and how property rights are protected. Policies like 100% Foreign Direct Investment (FDI) in construction development have also attracted global capital, injecting funds and best practices into the sector.

The future implications are diverse. Continued stability could attract more institutional investors, leading to further professionalization and consolidation. The integration of technology (PropTech) for better project management, sales, and property maintenance is expected to accelerate. However, challenges such as rising construction costs, land availability, and ensuring affordability for all segments of society, particularly the economically weaker sections, will persist. The sector's growth will also place increased pressure on urban planning, infrastructure, and environmental sustainability, necessitating smart and green development practices. Overall, a robust real estate sector is foundational for India's sustained economic growth and social development, making its health a critical indicator for policymakers and citizens alike.