India's housing market remains resilient, enters consolidation phase

Knight Frank predicts India’s residential real estate sector will stay resilient through the second half of 2026, moving into a consolidation phase rather than a correction. Strong premium‑housing demand, ongoing urbanisation, stable employment and lower home‑loan rates are expected to underpin sales, even as overall growth moderates. Developers face rising unsold inventory and price growth increasingly concentrated in the luxury segment, prompting incentives such as flexible payment plans and stamp‑duty waivers.

In Chennai, the market showed 3% year‑on‑year residential sales growth in H1 2026, with average prices up 5% to ₹7,555 per sq ft. Sales shifted toward mid‑ and premium‑price homes, while the affordable‑housing share fell sharply. Unsold units rose to 19,722, but a healthy 4.4 quarters‑to‑sell ratio indicated balanced demand‑supply. Office leasing totaled 3.6 million sq ft, a 28% decline from a high base yet still robust, supported by a 149% rise in Grade A space supply and vacancy falling to 8.5%. Global Capability Centres accounted for 45% of leasing activity, with major tenants including Citibank, Deloitte and DHL. Rental rates increased 7% to ₹74.5 per sq ft, and infrastructure projects such as Chennai Metro Phase II and the proposed Parandur Airport are expected to further boost demand.