Iran Conflict Impact: What global volatility means for India’s hotel and property markets

Despite global geopolitical challenges, especially those linked to conflict and disruptions in international markets, the Indian hospitality and real estate industries have continued to exhibit resilience. Industry experts say that while global volatility has impacted investor sentiment, India remains relatively insulated due to strong domestic demand and long-term structural growth.

The discussion comes in the context of Savills India acquiring a majority stake in Hotelivate, strengthening its position in the hospitality consultancy space.

Speaking on Zee Business, executives from Savills India and Hotelivate highlighted that India’s hospitality sector continues to expand, driven by leisure travel, business activity, and wedding demand.

Domestic demand driving hospitality growth

Anurag Mathur, CEO of Savills India, said the hospitality sector in India remains structurally strong despite global uncertainty. “There is still a lot of work happening and a lot more yet to come,” he said.

Mathur emphasised the importance of domestic demand, adding that it continues to support the sector even amid global disruptions. According to him, “Domestic tourism is the real driver. Occupancy levels and room rates are increasing, and the story has not changed.”

He also noted a shift in consumer behaviour, stating: “Indians are increasingly willing to pay premium prices for quality hospitality experiences.”

According to him, business travel, leisure tourism, and weddings have all seen strong growth after the pandemic, and demand has remained stable even during global uncertainty.

Hospitality evolving as a real estate asset class

Mathur said hospitality is increasingly being recognised as a structured real estate asset class in India.

He noted, “There is still a lot of work happening and a lot more yet to come,” while highlighting that transparency and yield visibility are improving as the sector matures.

However, he pointed out ongoing structural challenges, including high land costs, complex approvals, and delays in clearances across states.

He added that in some regions, hotel development requires multiple permissions, making execution time-consuming.

Strong domestic travel trends and return of weddings

Manav Thadani, Founder Chairman of Hotelivate, said India’s hotel industry has grown significantly after the pandemic. “Earlier, we were only talking about business hotels. Today, leisure demand has doubled and tripled,” he said.

He added that wedding tourism trends have reversed in India. “Weddings that used to go abroad are now coming back to India.”

Thadani also noted that outbound business travel has partially returned to India, and domestic demand is strong enough to absorb external shocks.

“There is sufficient domestic demand to support the sector. People are willing to spend the same $300–$400 equivalent in India if they receive quality and experiential hospitality,” Thadani said.

Institutional investor interest rising

Thadani highlighted increasing participation from global institutional investors.

He said, “We are seeing participation from investors like Blackstone and Brookfield in Indian hospitality, which shows long-term confidence in the market.”

Global capital flows and geopolitical uncertainty

On shifting investment flows due to geopolitical conflict, Thadani said global capital tends to move toward stable and open markets. “It depends on who is ready to take that investment,” he said.

Thadani explained that during the COVID period, regions such as Dubai and the UAE attracted significant capital due to their open policies.

He added that future flows will depend on which markets are best positioned to absorb investment in changing global conditions.

Real estate market stabilising after growth cycle

On the broader real estate sector, Mathur said the market is transitioning into a stabilisation phase after a strong multi-year growth cycle.

He said residential real estate is slowing but remains structurally strong due to low homeownership levels and long-term demand.

For commercial real estate, he noted continued expansion driven by global capability centres (GCCs), though global disruptions could lead to temporary moderation.

Strong office market performance: Knight Frank data

To substantiate the outlook, the report from Knight Frank India stated that the Q1 2026 period saw good performances in office market segments.

Office leasing reached 29.9 million sq ft, with global capability centres accounting for 48 per cent of total demand.

Vacancy levels declined to 13.9 per cent, while Grade A office spaces accounted for 93 per cent of total leasing activity.

In contrast, residential markets showed mild softness, with home sales across eight major cities at 84,827 units, down 4 per cent year-on-year (YoY), while new launches declined 2 per cent.

However, premium and luxury housing segments continued to outperform, indicating a shift toward higher-value housing demand.

Hospitality and real estate sector outlook

Experts said that despite geopolitical uncertainty and global volatility, India’s hospitality and real estate sectors remain fundamentally strong.

They emphasised that domestic demand, rising affluence, and institutional investment continue to support long-term growth, while both sectors are currently moving through a stabilisation phase rather than a downturn.