Investment rises, but affordable housing and project financing remain challenges

Real estate investment remains strong

India's real estate sector continues to attract institutional capital, with private-equity investment reaching approximately ₹57,917 crore between January and September 2026, according to the FICCI–ANAROCK report titled The Changing Landscape of Real Estate Investment in India.

The report, published in October 2026 and covered by The Federal on October 25, identifies 55 investment deals during the nine-month period.

The findings highlight the continued interest of institutional investors in residential, commercial, data-centre and other real estate assets. However, the report also points to uneven access to funding across different stages of project development.

Affordable housing faces a supply gap

One of the major concerns highlighted in the report is the declining share of affordable housing in new residential supply.

According to the report, affordable housing's share of new supply declined from 25% in FY2021–22 to 14% in FY2025–26. In contrast, high-end and luxury housing accounted for 45% of new supply in FY2025–26, compared with 13% four years earlier.

The trend reflects developers' growing focus on premium housing, where higher ticket sizes can support project economics. However, the decline in affordable supply raises concerns about access to homeownership for lower- and middle-income households.

Early-stage funding remains difficult

The report also identifies a financing gap during the initial stages of real estate development.

Land acquisition, regulatory approvals and pre-construction expenses often require capital before a project becomes eligible for conventional construction loans.

Developers may therefore rely on promoter equity, private-equity funds, alternative investment funds and non-banking financial institutions to meet early funding requirements.

The report suggests that structured private credit, platform-level equity and other financing mechanisms could play a larger role in supporting projects.

Data centres attract institutional investment

Data centres have emerged as an important investment category within Indian real estate. The report states that the sector attracted approximately US$2.5 billion in private-equity investment between January and September 2026.

However, electricity availability is a significant consideration for data-centre development. Reliable power, connectivity and supporting infrastructure will influence where new facilities can be established.

The report also highlights the need to expand investment beyond major metropolitan markets and improve the infrastructure available in emerging cities.

Market Perspective

The FICCI–ANAROCK findings point to a real estate sector attracting substantial capital but facing structural challenges in how that investment reaches different property categories and development stages.

The decline in affordable housing supply is particularly important because overall investment growth does not automatically translate into more homes accessible to middle-income buyers.

For the sector to grow more inclusively, improved early-stage financing, faster approvals, reliable infrastructure and a broader range of housing options will be essential. The balance between premium development and affordable housing will remain a major issue for policymakers and developers.