India’s real estate sector remained resilient amid the West Asia crisis, with capital inflows of $3.5-4 billion in the first half of 2026, supported by sustained demand, deleveraged developer balance sheets and robust institutional participation, credit rating agency CareEdge Ratings said on Wednesday.

“While the geopolitical situation in West Asia remains a key monitorable, the near-term impact on the Indian real estate sector is expected to remain limited,” Rajashree Murkute, senior director at CareEdge Ratings, said.

According to the rating agency, the impact of the West Asia crisis on India’s real estate sector has been uneven, with structural differences across segments.

Office leasing remained resilient due to global capability centre (GCC) demand, while industrial and warehousing continued to grow on a strong structural base. Affordable housing and project execution, however, faced cost pressures, the rating agency said.

“Healthy demand, resilient premium housing and stable leasing activity across commercial real estate should support the sector’s overall performance,” Murkute added.

The rating agency also highlighted an expansion in real estate and housing demand across Tier-I and emerging Tier-II and Tier-III cities, driven by urbanisation, infrastructure development, GCC expansion, manufacturing investment and government schemes such as the Pradhan Mantri Awas Yojana-Urban 2.0 (PMAY-U 2.0).

CareEdge said it expects residential unit sales in India’s top six cities to remain healthy at around 3.55 lakh units.

However, consistently elevated crude oil prices could result in cost escalations of around 2-3 per cent, further raising project costs and lowering developer margins, particularly for projects in the initial stages of construction, the rating agency said.

“A prolonged period of elevated inflation and tighter financing conditions could put pressure on developers with high leverage or significant refinancing needs, while financially stronger players are expected to remain resilient,” Divyesh Shah, director at CareEdge Ratings, said.

The rating agency estimates gross absorption of Grade A office space in the top six cities will remain above 90 million square feet in 2026. However, prolonged uncertainty could delay corporate expansion plans and leasing decisions, particularly by multinational companies, leading to slower space absorption.

Meanwhile, warehousing demand is expected to face short-term pressure, but CareEdge said growth would continue to be supported by third-party logistics (3PL), manufacturing investment and domestic consumption, keeping vacancy levels contained at around 11 per cent by the end of the year.

In the premium and luxury housing segment, CareEdge expects demand to remain resilient, supported by high-net-worth individuals (HNIs), affluent domestic buyers and non-resident Indians (NRIs).

The affordable housing segment, on the other hand, is likely to be more affected by geopolitical shocks, the rating agency said.