Amid the ongoing West Asia crisis, Brent crude prices have surged over 50% to cross $115 per barrel, triggering a broad-based increase in input costs for the real estate sector. Higher fuel prices have translated into elevated freight and logistics expenses, while key construction materials such as cement and steel are witnessing a sustained upward trajectory due to rising raw material costs.

As a result, construction costs have increased by 10-12% across several markets, according to industry experts. The industry is absorbing the shock through greater institutional discipline and tighter execution. With 2025 inflows exceeding $14 billion, the market is shifting from cyclical speculation to a more mature, performance-driven asset class, they added.

Investments in Indian real estate crossed $14 bn in 2025

Ankush Kaul, President – Sales, Marketing & CRM, Central Park, said that investments in Indian real estate are believed to have exceeded $14 billion in 2025, accounting for approximately 20% of all sectoral inflows. “This indicates that India remains a top investment destination for NRIs. Strong trust in India's economic stability and long-term growth potential is reflected in this increasing participation.”

He further noted that this momentum is likely to strengthen despite global uncertainties. High-end, lifestyle-focused projects that offer integrated living experiences are gaining popularity.

Global volatility may impact sentiment in the short term

Pratik Tibrewala, Head of Corporate Finance at M3M India, said, “Global volatility may shape sentiment in the short term, but it is no longer driving India’s real estate cycle. The sector today is being led by its own fundamentals. Demand remains steady, infrastructure is expanding, and there is a clear shift towards better quality and premium developments. At the same time, we are seeing renewed interest from NRIs, who increasingly view India as a stable long-term investment base.

According to Tibrewala, this shift is also visible in capital flows. Institutional investments are at record levels, with domestic capital taking on a larger role through REITs, AIFs, and other structured platforms. With equity markets seeing some moderation and outbound investments easing, a portion of that capital is naturally being redirected into Indian real estate across segments.

Developers, on their part, are responding to cost pressures with far greater discipline. “There is a stronger focus on efficient construction, the use of technology, and smarter sourcing. As a result, the sector is becoming more transparent, organised, and resilient, with the ability to absorb short-term shocks while continuing to create long-term value,” he added.

Domestic demand remains resilient

Shrivallabh Goyal, CEO and WTD at Reliance Model Economic Township, said, “Global portfolio reassessments amid geopolitical tensions and economic uncertainty are driving capital—from wealthy Indians, NRIs, and institutions—back to India’s stable policies and expanding infrastructure. Record FY25 remittances and $8.5 billion inflows mark a deliberate shift, not desperation. Domestic demand remains resilient, and markets are increasingly shrugging off global headwinds, attracting long-duration capital.

At the same time, oil-driven supply chain disruptions are pushing up steel and cement costs and delaying projects, forcing developers to adopt more disciplined execution, smarter procurement, and a shift towards integrated, logistics-resilient locations. From crude to concrete, reliability is trumping volatility—India’s real estate fundamentals continue to position it as a relatively safe bet in a disrupted global environment,” he explained.

Better execution to help absorb cost shocks

Vijay Ram Rattan, Chairman of Ram Rattan Group, said, “External factors have started to reflect in real estate, particularly through higher energy-linked costs that are feeding into logistics and key construction inputs such as steel. This is not unusual in a globally connected environment.”

“What is different this time is the industry’s ability to manage it. Compared to earlier cycles, developers are operating with tighter cost controls, more structured procurement, and sharper execution, helping absorb these pressures without materially affecting project timelines,” he pointed out.

Demand, meanwhile, remains steady. Infrastructure expansion, improving connectivity, and a sustained shift towards end-use-driven buying are supporting absorption across key markets. This is also visible in the alignment between supply and sales, indicating a more balanced and mature market environment.

Alongside this, the investment landscape is evolving meaningfully. Capital inflows into Indian real estate have remained strong, with growing participation across both built-up assets and development platforms. This is gradually shifting the sector from a largely cyclical play to a more institutional, performance-driven asset class. For developers, the focus remains on execution, financial discipline, and delivery, as these are increasingly becoming the defining factors for capital allocation and long-term value creation.