Capital Markets

India’s growth story is increasingly being shaped by the capacity of its cities, infrastructure and productive assets to support a larger and more formal economy. Real estate sits at the centre of this transition. It provides the physical infrastructure for households and businesses, creates employment through construction and allied activities, supports manufacturing and services
through commercial and industrial assets, and increasingly enables newer parts of the economy
such as digital infrastructure and organised logistics.

Its importance therefore extends beyond the value of property itself. Real estate influences economic output, employment, capital formation and a wide network of allied industries. These linkages make it an important enabler of Viksit Bharat; improving productive capacity, strengthening investment and creating the physical environment required for sustained economic
growth.

Summary:

As the year unfolds, conflict is becoming a defining global theme. Whether in trade, technology or geopolitics, competition and confrontation are increasingly shaping the economic outlook. Beginning in Iran, hostilities resumed in July following a brief respite, sending energy prices sharply higher in the process. The global economy has so far proven resilient to what Fatih Birol, head of the International Energy Agency, described as the “biggest energy security threat in history”. This resilience reflects weaker energy demand, particularly across Asia Pacific, as well as a substantial drawdown in global inventories, helping to keep the market broadly balanced.

However, reserves have fallen sharply, with inventories held by OECD nations reaching their lowest level since 1990, even before the recent US Iran framework agreement. This places renewed focus on the duration of the conflict, as the oil market’s ability to absorb disruption will diminish over time. The likely result is greater price volatility (even if we get a new deal), with implications extending well beyond energy markets through inflation, consumer and business sentiment, and the fiscal and monetary policy outlook.

KEY TAKEAWAYS

• A total of 22,290 rental contracts of island-wide private residential properties (excluding ECs) commenced during the quarter, up 5.1% from the 21,203 contracts recorded in the previous quarter.
  
• The URA rental index for non-landed private residential properties rose 0.4% QoQ.
  
• Based on Savills basket of high-end non-landed residential properties, the average monthly rent continued its upward trajectory, rising by 1.4% QoQ.
  
• Despite limited new completions, the overall vacancy rate of completed private residential properties (excluding ECs) rose to 6.4% in Q2/2026.
  
• While Singapore’s economic growth in 2026 is expected to outperform the official 2% to 4% forecast, the benefits to the residential leasing market may be limited. Mixed free cash flow trends among MNCs could restrain expatriate deployment overseas, while the removal of the 15-month wait-out period for private homeowners moving to HDB flats may reduce domestic leasing demand. Accordingly, we maintain our view that private residential rents will remain broadly flat in 2026.

The global data centre sector has emerged from a pivotal year in digital infrastructure, underpinned by continuous cloud migration and digitisation, combined with the proliferation of artificial intelligence, super-charging demand for data centre infrastructure. Across the globe, real estate transaction volumes, comprising single-asset-sales and development site acquisitions, totalled $16.5 billion in 2025 with development site acquisition volumes in particular surging 12.4% on 2024 volumes, the highest annual investment tally to date. Similarly, Knight Frank’s bespoke data centre appraisals valued the global stabilised data centre market at $1.95 trillion, a 39.3% increase on 2024. Looking ahead, 48GW is expected to be delivered between 2026 and 2029, representing a 77% increase in global supply volumes. Within this, AI supply volumes are set to expand from 8GW to 27GW, growing to 24.5% of total live IT.

Knight Frank’s ultimate guide to real estate market performance and opportunities in the world’s most promising economy.

H1 2026 opened against a broadly supportive macroeconomic backdrop, though conditions grew more complex as the period progressed. The Reserve Bank of India’s repo rate stood at 5.25% through H1 2026, reflecting a cumulative 125 basis points of easing since the start of the rate-cutting cycle. With the last reduction having taken effect in December 2025, the Monetary Policy Committee held at both its February and June 2026 meetings, citing West Asia conflict-related energy risks and a potentially deficient monsoon. FY 2026 GDP growth was estimated at 7.6%, affirming underlying domestic resilience. However, the RBI revised its FY 2027 GDP growth projection to 6.6% and raised its FY 2027 CPI inflation forecast to 5.1%, reflecting uncertainty around energy prices and food supply conditions. For the residential market, cumulative rate easing continues to support home loan affordability, but with further cuts on hold and global uncertainties mounting, the monetary tailwind that sustained demand through 2025 has largely run its course.

Accelerated growth, as outlined in the 2025 edition of this report, is no longer the most accurate descriptor of this dynamic and rapidly evolving global market. A more precise characterization is managed growth. Governments worldwide are rewriting the rules to ensure that new data center development does not overburden existing resources, particularly the power grid, and to address concerns associated with the industry’s expansion.