India: Real Estate: A Bengaluru-based Overview

Market and Regulatory Outlook for 2026

Bengaluru’s real estate sector enters 2026 with steady momentum, underpinned by a diversified economic base, sustained urbanisation and continued investment in infrastructure. Despite global macroeconomic uncertainty and tighter capital allocation across markets, Bengaluru has retained its position as one of India’s most active and resilient real estate hubs. Demand across commercial, residential and industrial segments remains strong, and the legal and regulatory framework has matured into a relatively predictable and compliance-driven environment.

India’s federal structure continues to shape the real estate landscape. Immovable property is governed by both central and state legislation, requiring market participants to navigate a layered regulatory regime. Over time, this dual framework has driven greater standardisation in transactions, though state-specific nuances – particularly in relation to land use, agricultural land and local approvals – remain critical in Karnataka.

Economic conditions and sectoral drivers

Bengaluru’s real estate activity is closely aligned with the performance of the technology, innovation and services economy. The city continues to attract global capability centres, research and development facilities and technology-led enterprises, which together form the backbone of office space demand. Today, occupier preferences have stabilised around high-quality, well-located assets that offer flexibility, sustainability features and long-term operational efficiency. While hybrid work models persist, they have largely translated into optimisation rather than contraction of office footprints.

Residential demand remains predominantly end-user driven. Buyer sentiment has improved significantly compared to the previous decade, supported by greater transparency, disciplined project launches and improved delivery timelines. Mid-income and premium housing segments continue to see consistent absorption, particularly in corridors benefiting from metro expansion, improved arterial roads and planned suburban rail connectivity. Peripheral micro-markets are expected to remain active as infrastructure development gradually unlocks new residential clusters.

Industrial and logistics real estate has emerged as a major growth driver. Increased manufacturing activity, expansion of e-commerce, data centres and warehousing requirements have fuelled demand for large-format land parcels and built-to-suit facilities around Bengaluru’s outskirts. State-level incentives, improved highway connectivity and access to skilled labour have strengthened Bengaluru’s position as a preferred industrial destination in southern India.

Core legal framework

The Transfer of Property Act, 1882 continues to govern the inter vivos transfer of immovable property across India, covering transactions such as sales, leases, mortgages, exchanges and gifts. When read together with the Registration Act, 1908, it mandates compulsory registration of specified instruments, forming the legal foundation of property ownership and transfer.

In Karnataka, state-specific legislation plays a significant role in regulating agricultural land, land ceilings, land use and conversion. Compliance with zoning regulations, local planning laws and municipal requirements remains central to transaction structuring and project development. Title verification and historical land-use analysis continue to be among the most critical legal exercises in Bengaluru real estate transactions.

Impact of RERA

The Real Estate (Development and Regulation) Act, 2016 (RERA) has become firmly embedded in the sector. In 2026, it is widely regarded as a stabilising framework that has reshaped market behaviour, rather than as a transitional reform. Mandatory project registration, escrow mechanisms, enhanced disclosure obligations and defined timelines have contributed to improved accountability and buyer confidence.

While RERA has increased compliance costs and procedural obligations for developers, it has also reduced speculative development and improved overall project quality. The regulatory ecosystem under RERA – including adjudicating officers and appellate tribunals – has developed a growing body of jurisprudence, bringing greater clarity to rights and obligations of promoters and allottees.

Land acquisition and infrastructure development

Infrastructure-led growth continues to play a significant role in Bengaluru’s real estate expansion. The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 governs land acquisition for public purposes, ensuring enhanced compensation and rehabilitation safeguards. Although the Act promotes fairness and transparency, its procedural requirements can impact project timelines, particularly for large-scale infrastructure and industrial developments.

As public infrastructure spending increases, early-stage legal structuring, stakeholder engagement and risk assessment have become essential tools for managing land acquisition-related challenges.

Insolvency and dispute resolution trends

The Insolvency and Bankruptcy Code, 2016 (IBC) continues to be a key mechanism for resolving financial stress in the real estate sector. The recognition of homebuyers as financial creditors has strengthened consumer protection while also adding complexity to insolvency proceedings. There is greater judicial clarity today on the interaction between RERA and IBC, though overlapping remedies and parallel proceedings remain an area of practical concern.

Dispute resolution trends indicate a growing preference for arbitration, negotiated settlements and tribunal-led adjudication over prolonged civil litigation. Commercial participants are increasingly focused on robust contract drafting, risk allocation and exit mechanisms to mitigate dispute exposure.

Foreign investment and capital flows

Foreign direct investment remains a critical driver of institutional activity in Bengaluru real estate. India’s liberal FDI regime permits 100% foreign investment in construction development projects under the automatic route, subject to prescribed exit conditions. This framework has encouraged long-term capital inflows, particularly into commercial offices, industrial parks and mixed-use developments.

Real Estate Investment Trusts (REITs) have further deepened the market by providing liquidity, transparency and exit opportunities for asset owners. Bengaluru continues to contribute a significant share of high-grade office assets to listed and proposed REIT portfolios. The introduction of small and medium REITs has expanded access to capital and enabled monetisation of smaller asset pools, broadening investor participation.

Private equity and alternative investment funds remain active, though investment strategies have become more selective. Investors increasingly prioritise governance standards, title certainty, regulatory compliance and ESG considerations. Joint ventures, phased investments and platform-based structures are now common features of institutional real estate transactions.

Challenges and risk considerations

Despite its strengths, Bengaluru’s real estate market continues to face structural challenges. Title fragmentation, legacy land-use restrictions and conversion-related issues remain key transaction risks. Regulatory approvals, environmental clearances and local authority permissions can extend development timelines and increase execution risk.

Infrastructure development, while improving, does not always keep pace with real estate growth, impacting connectivity and service delivery in certain micro-markets. As a result, market participants are placing greater emphasis on early-stage legal due diligence, conservative project planning and compliance-driven development strategies.

The year ahead

Looking ahead, Bengaluru’s real estate sector is expected to remain active and diverse across asset classes. Long-term fundamentals – demographic growth, employment generation and infrastructure investment – continue to support demand. While short-term market cycles and external economic factors may influence pricing and absorption, the overall trajectory remains positive.

The legal and regulatory environment will continue to play a central role in shaping outcomes, with increasing emphasis on transparency, accountability and risk management. For developers, investors and occupiers alike, success in 2026 will depend on informed structuring, regulatory foresight and disciplined execution.