New Delhi: India’s real estate market is entering a new phase of value creation, with investment returns increasingly expected to depend on net operating income (NOI) growth and strategic asset selection, according to a report released by property consultancy JLL on Monday.
The report said investors can still earn double-digit returns by holding high-quality office properties over a typical five-year investment period. However, future returns are expected to rely more on income growth than on falling capitalisation rates.
India’s real estate sector has matured into an institutional-grade investment destination, attracting around $78 billion in institutional capital since 2014.
The report also highlighted a significant decline in capitalisation rates across major real estate sectors. Between 2016 and the third quarter of 2026, office cap rates declined by 270 basis points, retail by 320 basis points and warehousing by 250 basis points.
Real Estate Returns to Depend More on Income Growth
Lata Pillai, Senior Managing Director and Head of Capital Markets, India, at JLL, said the market had reached a turning point, moving away from broad-based market revaluation towards more sophisticated and long-term value creation.
“India’s real estate market has reached a pivotal moment, moving beyond an era of market-wide re-rating to one focused on sophisticated, long-term value creation. The past decade was defined by a significant re-rating, with capitalisation rates compressing sharply across all key commercial sectors,” Pillai said.
She added that the next phase of the market would be driven by income growth rather than movements in capitalisation rates.
“The era of returns driven by market-wide cap rate compression is behind us, as the scope for further compression is limited given the way interest rates are moving,” Pillai said.
Over 600 Million Sq Ft of New Supply in Pipeline
The report said more than 600 million square feet of new supply across office, warehousing and retail segments is in the pipeline. In addition, around 200 million square feet of non-premium office stock is available for repositioning.
This provides investment opportunities across different risk categories, ranging from core institutional assets to value-add repositioning and opportunistic development.
The report also highlighted an upcoming pipeline of 40 million square feet by 2030, of which 70 per cent is expected to be premium supply.
According to JLL, this pipeline is expected to reshape the real estate landscape and support the long-term growth of institutional investment portfolios.