Indian realty pivots to institutional model; emerging segments to drive growth

Synopsis

India's real estate sector is transitioning from family-funded models to an institutionalized global asset class, fueled by rising investor participation and regulatory reforms. Increased inflows from private equity, family offices, and REITs are driving this evolution, with urbanization and emerging segments like warehousing poised for significant growth.

India’s real estate sector is undergoing a structural shift from traditional family-funded development models to a more institutionalised and globally integrated asset class, driven by rising investor participation, regulatory reforms, and evolving demand patterns.

The transition is being supported by increasing inflows from private equity, family offices and listed instruments such as real estate investment trusts (REITs) and infrastructure investment trusts (InvITs), marking a departure from legacy funding structures, industry experts said.

“India’s real estate sector is at an inflection point, with urbanization set to rise from 35% to nearly 50% by 2047, fundamentally reshaping demand and development patterns. The industry has already transitioned from reliance on family funding to more institutionalized capital through private equity and REITs and is steadily evolving into a global asset class,” said Niranjan Hiranandani, Chairman Emeritus of NAREDCO Maharashtra while speaking at a Maharashtra NextGen conference.

However, according to him, persistent challenges around land availability, pricing and financing need to be addressed.

Market participants noted that the sector is increasingly being viewed as a diversified asset class, with developers expanding beyond traditional residential and commercial formats into integrated platforms and specialised segments. Emerging categories such as senior living, warehousing and asset management platforms are expected to play a larger role in the next phase of growth, supported by infrastructure development.

Live Events

“India’s real estate sector has undergone a remarkable transformation over the past decade. Investor confidence, both domestic and international, is at an all-time high. The avenues like investments from the family offices and private equity have found new dimensions and asset classes in the sector in the form of branded residences, REITs and INVITs,” Vikas Jain, President, NAREDCO Maharashtra NextGen.

At the same time, investor interest in the sector is now broadening. Family offices, which have traditionally taken a conservative approach to real estate, are now actively exploring premium segments such as branded residences and hospitality assets as long-term holdings, driven by a combination of capital appreciation and asset-backed security.

Industry executives said the REIT market in India has also gained traction, offering both institutional and retail investors access to income-generating assets. The introduction of small and medium REITs (SM REITs) in 2025 is expected to further deepen participation by enabling fractional ownership and unlocking monetisation opportunities estimated at Rs 67,000-71,000 crore.

Sustainability is emerging as another key theme, with developers and investors increasingly factoring in environmental, social and governance (ESG) considerations. While green development is gaining traction, stakeholders emphasised the need for clearer financial metrics and measurable returns to drive wider adoption.

The sector’s evolution is also being underpinned by regulatory reforms such as the Real Estate (Regulation and Development) Act (RERA) and the Goods and Services Tax (GST), which have improved transparency and boosted investor confidence. As a result, foreign capital now accounts for a significant share of institutional investments in Indian real estate, industry experts said.

With rising household incomes, urbanisation and deeper integration with global capital markets, the industry is expected to see sustained expansion over the coming decade, supported by a broader capital base and diversification of asset classes.

(You can now subscribe to our Economic Times WhatsApp channel)

(Catch all the Business News, Breaking News and Latest News Updates on The Economic Times.)

Subscribe to The Economic Times Prime and read the ET ePaper online.

...moreless

(You can now subscribe to our Economic Times WhatsApp channel)

(Catch all the Business News, Breaking News and Latest News Updates on The Economic Times.)

Subscribe to The Economic Times Prime and read the ET ePaper online.

...moreless