Rising oil prices could tighten affordable housing, while luxury market stays strong
A CareEdge Ratings report says India’s real estate sector will stay broadly resilient despite West Asia tensions, but higher crude costs may raise construction expenses by 2-3%, pressuring affordable housing and leveraged developers.
CareEdge Ratings forecasts that India’s property market will remain largely stable despite geopolitical uncertainty from the West Asia crisis, thanks to robust demand and stronger developer finances. A sustained rise in crude oil prices could increase construction costs by 2-3%, creating pressure on affordable housing projects and highly leveraged builders. In contrast, the premium and luxury segments are likely to stay resilient, supported by high-net-worth individuals, affluent domestic buyers, and non-resident Indians.
Residential sales in the six major cities are expected to hover around 3.55 lakh units in CY2026, with a shift toward homes priced above Rs 1.5 crore. Office space demand, driven by Global Capability Centres, should absorb over 90 million sq ft, while listed REITs maintain occupancy near 92%. Institutional investors poured $3.5-4 billion into Indian real estate in the first half of 2026, the strongest inflow since the pandemic, underscoring confidence in the sector’s long-term fundamentals.
Why it matters
Higher oil prices could make low-cost homes less affordable, affecting millions of Indian homebuyers.
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