India: A Real Estate: Pan-India Overview

Overview of the Market

A positive global perspective enhanced by conducive policy initiatives has resulted in a flourishing Indian real estate sector. The size of the real estate industry in India in 2025 was estimated to be USD0.53 trillion, and it is expected to reach USD1 trillion by 2030, growing at a compound annual growth rate of approximately 8-9%. The sector has demonstrated remarkable resilience, with continued momentum following the strong recovery observed in the post-pandemic period.

The industry demand has been further invigorated owing to the growing population, as well as favourable ownership sentiment. With an approximately 7% contribution to the GDP, a continued shift in investor preference from China to India amid global supply chain diversification, and booming demand from IT, GCCs (Global Capability Centres), and manufacturing sectors under the Production-Linked Incentive (PLI) schemes, the sector is growing exponentially.

Besides the traditional commercial segment, there has been significant growth in segments such as data centres, co-working, co-living, life sciences, and industrial and warehousing spaces. India’s data centre capacity has grown substantially, with operational capacity now at almost 1,500 MW up from approximately 375 MW in 2020. In the housing segment, there has been sustained demand for premium and luxury housing, continued integration of technology in the form of smart homes, and increased focus on sustainable and green-certified developments.

As far as investments are concerned, private equity investments in India’s real estate sector have remained robust, reaching approximately USD6.7 billion in 2025 reflecting a 59% year-on-year increase, with office and data centre assets leading capital inflows. The Indian REIT market has also matured significantly, with listed REITs commanding a market capitalisation exceeding USD20 billion and continued strong institutional investor interest. Foreign institutional inflows have remained steady, supported by India’s inclusion in global bond indices and continued FPI interest in the real estate sector.

However, despite the growing market demand and encouraging legal and policy initiatives, the sector is marred by deep-rooted and perennial complexities that are rigid, administrative and technical. Legal advice is regularly sought by various stakeholders operating in the sector, on both traditional real estate matters and private equity transactional issues.

Legal challenges mostly pertain to delayed and pending projects, the unavailability or under-utilisation of available land, litigated land, a protracted approval process, enhanced financial and regulatory compliance burdens, labour management and the lack of availability or insufficiency of funds.

Government initiatives

Beyond urbanisation, strong GDP growth, increasing incomes, and other ancillary factors, a major role has been played by the government through beneficial legislation and policy initiatives to push the sector, as well as gain investor confidence. The following are notable schemes and initiatives propelling the real estate market:

• Pradhan Mantri Awas Yojana – Urban 2.0 (PMAY-U 2.0), launched in September 2024, targeting one crore additional urban poor and middle-class families;
• Smart Cities Mission 2.0, with continued focus on urban development and digital infrastructure;
• foreign direct investment (FDI) of up to 100% for township and settlement development projects;
• the Special Window for Affordable and Mid-Income Housing (SWAMIH) fund, which has provided last-mile funding to complete over 60,000 stressed housing units; and
• an affordable housing fund (AHF) in the National Housing Bank (NHB) for microfinancing of HFCs.

In addition to these regulatory changes, tax exemptions, the infrastructure status of affordable housing, rationalised GST rates, and a favourable loan interest rate regime have proved beneficial for uplifting the sector. The Model Tenancy Act, 2021, though adopted only by certain states, has provided a framework for balancing landlord and tenant interests. The government’s continued focus on infrastructure development through initiatives like the National Infrastructure Pipeline (NIP) and the PM Gati Shakti National Master Plan has created multiplier effects for real estate demand. The Union Budget 2026-27 further supports the sector through increased public capital expenditure (INR12.2 trillion), the City Economic Regions initiative with INR50 billion allocation per region, and a tax holiday until 2047 for foreign cloud service providers using Indian data centres.

Laws governing real estate transactions in India

Matters pertaining to real estate transactions in India are governed by both central and state laws, primarily:

• the Transfer of Property Act, 1882;
• the Registration Act, 1908;
• the Indian Stamp Act, 1899;
• the Real Estate (Regulation and Development) Act, 2016 (RERA);
• the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013;
• the Indian Easement Act, 1882;
• the Indian Contract Act, 1872; and
• the State Land Revenue Codes.

In addition, state Rent Control Acts (and the Model Tenancy Act, 2021, in adopting states); Regional & Town Planning and Municipal Acts; Tenancy Acts; the Foreign Exchange Management Act 1999 and FEMA Non-Debt Instrument Rules, 2019; the Indian Succession Act 1925; the Co-operative Societies Acts; the Insolvency and Bankruptcy Code, 2016 (with the February 2025 IBBI amendments enhancing protections for real estate allottees, including provisions for handing over possession, appointment of facilitators, and involvement of RERA authorities in insolvency proceedings); the Apartment Ownership Acts; the Environment Protection Act, 1986 and related environmental clearance requirements under the EIA Notification, 2006 (as amended), etc, also have bearing on specific interactions in the real estate domain.

Some local customary laws also apply, to the extent that they are not inconsistent with the statutory laws. Understanding local laws and challenges is particularly crucial for large-scale acquisitions. In addition, planning and zoning are regulated by legislation, rules and regulations made by individual states and local bodies. These bodies are also responsible for providing sanctions, conversion of lands, occupation certificates, etc. Moreover, policies such as land ceiling policies, land pooling policies, special economic zones, the Prohibition of Benami Property Transactions Act, 1988 (as amended in 2016), master plans, development control regulations, etc, may also pose significant compliance challenges.

Recent legal developments (RERA, GST, SEBI and SM REITs)

The Real Estate (Regulation and Development) Act, 2016 (RERA) has been a landmark piece of legislation that has proved invaluable in catalysing the growth of the domestic real estate sector in India. All states and union territories have now notified rules and established regulatory authorities. RERA has brought about a substantial shift in the market towards greater transparency, accountability, and consumer protection. The sector has witnessed improved compliance, with over 130,000 projects registered across the country and increasing enforcement activity by state regulators. However, the Supreme Court has noted concerns regarding RERA’s enforcement effectiveness, with observations in 2024-2025 emphasising the need for stronger execution powers and expedited dispute resolution.

Similarly, the implementation of goods and services tax (GST) has been instrumental in bringing regulation, transparency and accountability to the Indian real estate sector. Following the 2019 rate rationalisation (5% for non-affordable and 1% for affordable housing without input tax credit), the GST regime has stabilised. Industry participants continue to advocate for restoration of input tax credit to reduce the cascading effect of embedded taxes in the construction value chain.

In a significant development for the sector, SEBI notified the framework for Small and Medium REITs (SM REITs) in March 2024 through amendments to the SEBI (Real Estate Investment Trusts) Regulations, 2014. SM REITs permit fractional ownership of real estate with a minimum asset value of INR 50 crores, providing retail investors access to commercial real estate investments. Several SM REITs have since received regulatory approval, creating a new avenue for real estate investment democratisation. The April 2025 SEBI REIT Amendment Regulations further enhanced the framework by permitting transfer of locked-in units amongst sponsor group entities, allowing REITs to invest in infrastructure assets for fixed rental income, and strengthening trustee governance requirements. The traditional REIT market has continued to mature, with existing listed REITs expanding their portfolios and demonstrating consistent distribution yields. Additionally, SEBI has enhanced the regulatory framework for InvITs (Infrastructure Investment Trusts), which have emerged as significant vehicles for infrastructure asset monetisation, including real estate-adjacent assets such as warehousing and logistics facilities.

Common legal issues

The sector is unfortunately complicated by a web of compliance burdens, bureaucratic red tape and a lack of conducive policies. Issues like complicated prior real estate transactions, non-available and illegible erstwhile title and revenue documents, incomplete computerisation of land records, and cases of fabricated records, have made the process of establishing a clear and marketable title to real estate a multi-layered and complex pursuit.

Disputes over clear and valid title are commonplace, with partition, succession, repairs, encroachment, etc, adding fuel to the fire. Fraud, counterfeits, false promises and misrepresentations in real estate transactions form another major chunk of legal issues in the domain. Despite efforts to bring transparency and limit government interference, bribery and corruption continue to pose a serious risk to the Indian real estate market.

Government intervention is therefore still being sought to meet the demands of granting the sector industry status, streamlining property title issues through initiatives like the Digital India Land Records Modernisation Programme (DILRMP) and proposed conclusive titling legislation, increasing transparency in land records through digitisation, establishing single window clearance systems (several states have implemented online approval portals), as well as providing financial backing, especially last-mile funding. The continued evolution of ESG considerations, climate-related disclosure requirements, and green building standards also present new compliance frontiers for market participants operating in this dynamic sector.