Where should you invest Rs 1–2 crore in real estate in 2026? B.K. Malag explains

As Indian real estate enters 2026 with steady demand and improving institutional interest, investors are increasingly focused on where to deploy capital rather than whether to invest.With residential preferences shifting toward liveability and infrastructure-led locations, and commercial assets offering more structured income avenues, choosing the right property has become more nuanced.In this interaction with Kshitij Anand of ETMarkets, B.K. Malagi, Vice Chairman of Experion Developers, shares his perspective on how investors planning to deploy ₹1–2 crore can strike the right balance between residential and commercial real estate, highlighting the importance of location, asset quality, and long-term fundamentals in the year ahead. Edited Excerpts -Q) Thanks for taking out time. BSE Realty index might have underperformed versus Nifty 50 in 2025, but real estate as a category and as an asset class has done well. Please help us with an overview.A) If one were to look only at stock indices, one would miss what actually happened on the ground in 2025: residential demand stayed firm across most large markets, particularly in the premium and upper-mid segments, driven by buyers with genuine need rather than speculation.Commercial leasing also surprised on the upside, something which usually happens only when companies feel confident about hiring and expansion.Real estate moved at a very different pace compared to equities, and last year clearly showed that its fundamentals remain intact.Q) Branded residences are probably the biggest theme that dominated luxury in 2025. What do you think are big trends you're seeing that might pop up in 2026?A) Beginning in 2026, consumers will prioritise quality of life over sheer size. Buyers will look closely at how a project improves daily living, valuing strong connectivity and infrastructure even in peripheral locations over congested city centres.Thoughtful design will matter more — efficient layouts, balanced density, privacy, and wellness-focused features such as green spaces and healthy indoor environments are becoming essential.Sustainability is no longer optional; energy efficiency, resource management, and environmentally responsible construction are now baseline expectations. At the same time, technology is evolving from novelty to necessity.Smart systems are being integrated pragmatically to enhance comfort, security, and operational efficiency. In this landscape, successful projects will be those that deliver holistic, long-term liveability, not just scale or surface-level amenities.Q) Will 2026 be a stronger year for institutional and foreign capital inflows into real estate? What will investors focus more on?A) Yes, we do expect 2026 to show better traction in institutional participation. Investors are spending more time understanding the asset quality, tenant profile, and exit visibility. Grade-A offices would remain high on their radar, especially those aligned with GCC demand and long lease tenures. Data centres are emerging as a serious asset class. The emphasis would be on stability, compliance, and predictable income.Q) What is the role of REITs or fractional ownership in 2026, both on new listings as well as retail investor participation?A) REITs and fractional ownership are inching their way to become part of mainstream investment conversations. The SM REIT framework is particularly important because it brings smaller but well-performing assets into a regulated structure.For retail investors, this changes the perception of commercial real estate from being inaccessible to investable. That said, adoption will be gradual. Investors still need education on risk, yield cycles, and liquidity expectations.With time, these platforms will facilitate broadened participation, but their real success will lie in the quality of underlying assets and consistent performance, over and above the impact of merely lower ticket sizes.Q) Office leasing surged significantly in 2025, partly due to global capability centres. What are the factors that are bringing in these occupiers to Indian markets today?A) GCCs are no longer here just to save costs. Many of them are handling core functions such as product development, analytics, and AI-driven research.India has the strength of talent that cannot be replicated in most markets, and now companies feel confident about extending their operations here.The infrastructure quality has shown considerable improvement, especially in the typical technology hubs.Client expectations for global-class facilities in terms of design, environment, and security are being easily met in our country. The ecosystem today supports both expansion and innovation.Q) What are the big trends you are seeing in NCR?A) A clear infrastructure-driven shift is being seen in NCR. New expressways, metro lines, and air connectivity, such as Jewar airport, are stretching the parameters concerning where people will reside and work. High-end housing demand persists and remains strong.Commercial activity, too, is percolating beyond traditional hubs, with improved connectivity at the heart of this trend.The second obvious trend is the steady growth of logistics and warehousing. Though often unseen, it forms a very important part of regional economic activity. Growth in NCR today appears far more structured and systemic.Q) In the year 2025, are Tier-II and Tier-III cities emerging as serious contenders for both residential and commercial activity? What's driving this shift?A) Yes, and this phenomenon has been happening for some years now. Infrastructural connectivity in terms of better highways, airports, and internet connectivity has worked towards bridging the gap between the bigger cities and the smaller ones.For the people living there, this market offers better spaces and purchasing power. For the companies, this translates to access to talent and infrastructural potential without the attendant costs and congestion. Companies are also finding that the retention of talent occurs better there.Q) How do you see rental yields trends in the new year?A) For 2026, yields are likely to be incremental, with selective improvement in high-quality commercial assets. Office assets with strong tenants and modern specifications are set to continue their performance.As housing availability increases, residential rentals will witness modest gains. However, well-located and well-managed properties offering amenities that ensure physical and mental wellness will outperform.Q) If someone intends to invest Rs 1–2 cr in the year 2026, where should the ideal residential or commercial asset be, in which geography, and why?A) For this investment range, balance will be the key. On the commercial side, fractional ownership or SM REIT exposure to Grade-A offices will provide stable income without adding to management complexity.As far as residential investment goes, a premium home within an adequately connected NCR micro-market makes a lot of sense, particularly in areas where infrastructure is fast catching up.The developer's credibility and long-term liveability are the keys here. Real estate is best rewarded by patience, and the fundamentals of location continue to remain paramount.Q) Your major takeaways of the year 2025?A) The major takeaway from 2025 is that Indian real estate has indeed become much more disciplined. Demand is increasingly driven by end-users and astute investors.Growth possibilities in the commercial segment will also remain strong and sustainable. The industry seems more developed and synchronised with economic growth compared to a few years back. Also read | Ola Electric vs Ather Energy shares: Which EV bet looks stronger for your portfolio right now?(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)