India’s real estate sector is seeing a renewed momentum driven by rising housing finance and sustained infrastructure investment, but the Economic Survey 2025–26 suggests that the durability of this upcycle will depend less on credit availability and more on urban execution, affordability and institutional capacity.
The Survey notes that outstanding individual housing loans have crossed Rs 37 lakh crore, reflecting deeper financialisation of housing demand over the past decade. Housing credit has emerged as a key channel linking household consumption, construction activity and capital formation. However, the Survey also underlines that cities — which generate a majority of national output — face binding constraints related to land, mobility, governance and infrastructure capacity that could limit the impact of rising demand.
Developers say the pickup in housing finance is unfolding alongside persistent urban capacity constraints. TheSurvey identifies governance deficits and binding constraints in land, housing and mobility as key structural challenges in Indian cities, noting that fragmented authority and weak institutional capacity could limit the economic returns from rising housing demand.
Mr Mohit Goel, Managing Director, Omaxe, said the Survey captures the link between financialisation and housing demand, noting that the rise in housing loans points to growing confidence among homebuyers and reinforces housing’s role as a long-term investment. At the same time, he said the emphasis on economically productive, socially inclusive and environmentally sustainable cities highlights the challenges facing urban centres as they absorb this growth, particularly in emerging markets.
Infrastructure Push Reshapes Demand Geography
TheSurvey notes that sustained public capital expenditure on transport, logistics and urban infrastructure has reduced regional connectivity gaps and expanded the economic influence of non-metro cities. It highlights that infrastructure-led development is unlocking new growth corridors beyond major metros, though outcomes vary sharply based on execution capacity.
Reflecting this shift, Abhay Mishra, President & CEO, Jindal Realty, said the Survey clearly indicates that infrastructure-led growth will be a defining catalyst for real estate, particularly in Tier-II markets. He noted that sustained investment in roads, railways, urban infrastructure and logistics is making cities such as Sonipat and Kurukshetra increasingly attractive to end-users and investors, with improved connectivity, formalisation and regulatory transparency strengthening buyer confidence and project viability.
India’s economy is estimated to grow at around 7.4 per cent in FY26, supported by domestic consumption, public capital expenditure and ongoing structural reforms, according to the Economic Survey 2025–26. At the same time, the Survey cautions that sustaining urban growth will require improvements in capital formation, land-use efficiency and execution capacity, warning that fragmented governance and weak implementation can dilute returns on large investments.
Against this backdrop, Sidharth Chowdhry, Managing Director, Dalcore, said the Survey reinforces confidence in India’s medium-term growth trajectory, but institutional capital is becoming increasingly selective. As cities evolve into integrated economic engines, he said, capital is gravitating towards professionally managed, future-ready commercial assets that combine sustainability, operational efficiency and predictable cash flows, rather than speculative or execution-heavy developments.
Affordable Housing Faces Supply Frictions
The Survey 2025–26 notes that while housing demand remains broad-based, supply-side rigidities continue to constrain affordable and mass housing segments. It flags issues around land availability, zoning norms, approval timelines and cost structures as persistent bottlenecks, warning that without addressing these frictions, affordability gains from rising incomes and credit access could remain uneven.
Interpreting this,Binitha Dalal, Founder and Managing Partner, Mt. K Kapital, said the Survey outlines the right priorities, but execution will be decisive. She argued that reclassifying affordable housing based on unit size rather than value could significantly expand supply and improve access for end-users. Dalal also pointed to unresolved issues such as double GST indexation on joint development agreements, noting that clarity here could unlock land availability and improve long-term project viability, particularly in redevelopment-led urban markets.
TheSurvey reframes cities as engines of production and employment rather than passive population clusters, noting that India’s growth will increasingly depend on how effectively urban centres integrate manufacturing, logistics, skills and housing. At the same time, it cautions that fragmented planning and weak coordination between land use, infrastructure and economic activity continue to limit scale and productivity.
Against this backdrop, Shrivallabh Goyal, CEO & Whole-Time Director, Model Economic Township (Reliance Met City), said the Survey rightly positions cities as economic infrastructure. He noted that India’s next phase of growth will hinge on building integrated ecosystems that combine industrial activity, logistics, skills and urban living. Platforms such as integrated industrial townships, he said, can help enable production, exports and employment at scale, but only if infrastructure readiness, sustainability frameworks and policy alignment keep pace with ambition.
Infrastructure Scale Is Rising, Delivery Remains The Test
Public capital expenditure on transport, energy and logistics has remained elevated in recent years, easing connectivity gaps and improving economic integration across regions, the survey shows. At the same time, it flags that approval delays, coordination gaps and uneven private participation continue to affect project timelines, limiting the productivity gains from infrastructure investment.
Interpreting this cautiously, Mohit Jandu, Managing Director, J Infratech, said infrastructure is increasingly being treated as a strategic asset rather than merely a growth lever. He noted that investments in transport, energy, green systems and multimodal logistics are strengthening resilience in a volatile global environment, but warned that stable policy frameworks, faster approvals and deeper private participation will be critical to sustain momentum. If implementation does not keep pace with intent, he said, infrastructure may fall short of its potential to enhance competitiveness, generate jobs and improve quality of life across regions.
As Indian cities expand, the Survey underscores the importance of improving urban capacity, accessibility and land-use efficiency to support higher-density growth. It notes that weaknesses in planning coordination and infrastructure readiness can undermine the quality and productivity of urban expansion, even as demand for housing and commercial space rises.
Interpreting this shift, Yateesh Wahaal, Director of Finance at M3M India, said the survey’s emphasis on urban capacity is directly relevant across premium housing, branded residences, commercial, and mixed-use developments. He said that as cities evolve, demand is increasingly tilting towards well-designed developments that combine lifestyle, connectivity and long-term value. According to Wahaal, alignment between policy-led urban planning and the delivery of high-quality, sustainable built environments will be critical to ensuring balanced and future-ready urban growth.
Taken together, the Economic Survey 2025-26 suggests that real estate’s next phase will hinge less on credit and capital flows and more on execution. Strengthening urban governance, land-use efficiency, and planning coordination will be key to turning demand into durable, affordable and productive urban growth. |
