ESG and Tech Are Reshaping Housing Preferences in FY 2026
A New Dawn for Indian Homes
The landscape of Indian real estate is shifting underfoot, and the twin forces driving this change are Environmental, Social, and Governance (ESG) principles and technology-led innovation.
Not so long ago, homebuyers in India would prioritise little beyond location, price, and square feet. Now, the modern buyer’s checklist is expanding: air quality, energy efficiency, community well-being, seamless digital experiences, and even the carbon footprint of their future home. As we head into FY2026, ESG and technology aren’t just buzzwords—they’re essential ingredients shaping where and how Indians choose to live, invest, and grow.
In this deep dive, we’ll explore how ESG frameworks and smart tech are rewriting the script for Indian housing, why developers are racing to adapt, and what all this means for your next property decision.
The ESG Imperative: More Than a Trend
Why ESG Matters in Indian Real Estate
ESG—environmental, social, and governance—principles have moved from boardroom agendas to buyer expectations. In India’s accelerating urbanisation, real estate is both a contributor to environmental challenges and a powerful change agent. The sector accounts for nearly 40% of global carbon emissions, and as Indian cities grow, the pressure to build sustainably has never been greater1.
Investors, regulators, and occupiers are now willing to pay a premium for energy-efficient buildings, use sustainable materials, and prioritise occupant health. Major Indian cities—Delhi-NCR, Mumbai, Bengaluru, Pune, Chennai, Kolkata—already boast a 30% certified stock of green buildings, a figure that’s rising sharply2. Developers like Godrej Properties have committed to net-zero carbon emissions by 2050, while others are integrating water recycling, solar energy, and “green steel” into their projects1.
The Tangible Benefits
There’s complex data behind the ESG wave. Buildings with robust ESG credentials attract higher-quality tenants, command premium rents, and enjoy greater long-term stability2. According to a 2023 whitepaper, ESG-driven real estate investments in India surged from 5% in 2021 to 13% in 2022, reflecting a 2.4x increase in deal value to $7.9 billion2. This isn’t just about compliance—it’s about value creation, risk mitigation, and future-proofing assets.
Social and Governance Dimensions
Social responsibility is equally pivotal. Modern developments are expected to foster community, ensure accessibility, and support local ecosystems. Governance—transparent reporting, ethical practices, and regulatory compliance—builds trust with both investors and residents. The result? Projects that aren’t just places to live, but communities where well-being is woven into the design.
Technology: The Engine of Experience
The PropTech Revolution
If ESG sets the standards, technology delivers the experience. The Indian residential market is witnessing a PropTech (property technology) revolution that’s transforming every stage of the buyer’s journey—from discovery to move-in and daily living3.
Virtual reality (VR) and augmented reality (AR) now let buyers take immersive 3D tours of unbuilt flats, explore neighbourhoods, and even customise finishes—all from their smartphones4. Artificial intelligence (AI) powers personalised property recommendations, chatbots handle queries around the clock, and blockchain secures title records, reducing fraud and disputes4. Cloud-based platforms streamline paperwork, making transactions faster and more transparent.
For developers, data analytics and IoT (Internet of Things) sensors optimise everything from construction efficiency to maintenance. Smart buildings use AI-driven systems to monitor energy use, predict equipment failures, and even adjust lighting and cooling based on occupancy—saving costs and carbon alike5.
Smart Homes: The New Normal
Home automation is no longer a luxury. Smart lighting, voice-controlled appliances, app-based security, and predictive maintenance are becoming standard offerings, especially in premium and mid-segment projects4. The Indian smart home market is projected to grow at a compound annual rate of over 35% from 2021 to 2026, reflecting a surge in demand for convenience, security, and efficiency6. As Sandeep Chhillar of Landmark Group puts it, “The future of real estate is creating spaces that speak experiences and are mindfully designed with intelligent, efficient, and lifestyle values”6.
Bridging the Digital Divide
Even India’s smaller cities and towns are joining the tech wave. Property portals, digital payment gateways, and online legal services have made it possible for buyers in tier-2 and tier-3 cities to participate in the market with confidence. For NRIs, digital platforms offer end-to-end remote buying—a game-changer for India’s $6.99 billion real estate transaction market at the start of FY20263.
The Indian Market in FY2026: A Snapshot
Growth Trajectory
Despite global economic headwinds, India’s residential real estate market has shown remarkable resilience. Residential sales in key cities rose nearly 77% between FY19 and FY25, with under-construction homes making up 57% of transactions in FY257. The sector is projected to maintain steady growth in FY2026, with sales volume expected to rise by 5–7% and average prices appreciating by 4–6%9. However, growth rates are expected to moderate from the post-pandemic surge, as affordability becomes a pressing concern in some segments1011.
Segment Shifts
Premium and Luxury: Demand for homes priced above ₹1 crore is surging, driven by rising disposable incomes and evolving lifestyle preferences. The share of premium and luxury launches has jumped from 9% in 2020 to 37% in 2024, and could reach 40% by 20269.
Affordable Housing: After a pandemic-era boom, the affordable segment saw a 9% year-on-year dip in sales in Q1 2025, though inventory levels are correcting712. Government schemes and lower interest rates may revive this segment in FY2026.
Rental and Co-Living: Flexible living arrangements and co-living spaces are gaining traction among young professionals, supported by policy reforms like the Model Tenancy Act7.
Tier-2 and Tier-3 Cities: Cities like Bhubaneswar, Nagpur, and Jaipur are emerging as residential hubs, thanks to infrastructure development, job growth, and improved connectivity7.
Price and Sales Outlook
India Ratings forecasts a 3–4% rise in home prices in FY2026, propelled by strong sales in major cities. Bengaluru led price growth in 9MFY25 at 23% year-on-year, followed by NCR (13%) and Pune (12%)1011. However, with inventory levels rising and demand moderating, the market is entering a phase of more balanced growth.
How ESG and Tech Are Changing Buyer Preferences
The Informed, Discerning Buyer
Today’s homebuyer is more informed, more demanding, and more values-driven than ever. They expect:
Sustainability: Energy-efficient designs, renewable energy integration, water conservation, and green spaces1.
Health and Wellness: Natural light, ventilation, low-VOC materials, and amenities that promote physical and mental well-being.
Convenience: Seamless digital experiences—virtual tours, online bookings, app-based services, and smart home features3.
Transparency: Clear title history, ethical developer practices, and robust after-sales support.
These preferences aren’t limited to luxury buyers. Even mid-income segments are prioritising ESG and tech features, recognising their long-term value and quality-of-life benefits3.
The Developer Response
Forward-thinking developers are racing to meet these expectations. They’re integrating:
Green Certification: Pursuing IGBC, LEED, or GRIHA certifications to signal sustainability commitment3.
Smart Infrastructure: Deploying IoT, AI, and automation for energy management, security, and maintenance5.
Community Focus: Designing inclusive, walkable neighbourhoods with parks, cycling tracks, and communal spaces.
Resilient Design: Building for climate adaptability—flood mitigation, heat reduction, and disaster resilience2.
Projects that deliver on these fronts aren’t just selling homes—they’re offering a lifestyle aligned with the aspirations of a new generation.
Tech-Forward Townships
Across Gurugram, Bengaluru, and Pune, new townships are rolling out smart grids, app-controlled amenities, and AI-driven security. These features, once considered premium, are quickly becoming market standards4.
Challenges and the Road Ahead
Affordability and Access
While ESG and tech add value, they also increase costs. Striking a balance between sustainability, innovation, and affordability is a key challenge for the sector. Entry-level and mid-income buyers may find some green or smart features out of reach unless developers and policymakers find ways to scale solutions cost-effectively7.
Regulatory Landscape
India has taken bold steps with RERA, the Smart Cities Mission, and PMAY, but there’s room to strengthen further ESG disclosure norms, green financing, and incentives for sustainable construction5. The recent review of ESG disclosure rules by Indian regulators has been welcomed by investors, signalling a maturing market13.
Urbanisation and Equity
By 2030, 38% of India’s population will live in cities, placing immense pressure on infrastructure and resources5. Ensuring that the benefits of ESG and tech reach all income groups—not just the affluent—is critical for inclusive growth.
Climate Resilience
Indian cities are increasingly vulnerable to extreme weather. Developers must integrate climate resilience into their designs—flood-proofing, heat mitigation, and disaster-ready infrastructure—to protect both assets and communities2.
Why This Matters for Homebuyers and Investors
For homebuyers, the shift towards ESG and tech means healthier, more comfortable, and more future-ready living spaces. These homes are likely to hold their value better, offer lower running costs, and provide a higher quality of life.
For investors, ESG-compliant, tech-enabled properties are becoming the gold standard. They attract premium tenants, enjoy stronger occupancy, and are better positioned for regulatory changes and market disruptions2. The data is precise: green and smart buildings are not just ethical choices—they’re smart investments.
For developers, adapting to these trends isn’t optional. Projects that lag on sustainability or digital innovation risk becoming obsolete, while those that lead will capture premium buyers and command market loyalty.
Conclusion: Building the Future, Today
As FY2026 unfolds, the Indian real estate market stands at an inflexion point. ESG and technology are no longer niche concerns—they’re central to how Indians live, invest, and envision their futures. The homes of tomorrow will be judged not just by their marble floors or city views, but by their carbon footprint, their digital soul, and their contribution to community well-being.
For buyers, this is an opportunity to align your most significant investment with your values. For developers, it’s a call to innovate, differentiate, and lead. And for India, it’s a chance to build cities that are not just bigger, but better—sustainable, smart, and inclusive.
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Note:
All statistics, trends, and case studies cited are based on the latest available industry reports and news analyses as of July 2025. For the most current project-specific details, prospective buyers are encouraged to consult developers directly and review project certifications and technological features before making a purchase decision.
This blog is intended for informational purposes and reflects the views of industry experts and market trends as of the date of publication. It does not constitute investment advice. Always conduct your own due diligence before making property decisions.
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