After navigating a year marked by recalibration, India’s real estate sector closed 2025 on a steadier note. The latest Knight Frank–NAREDCO Real Estate Sentiment Index for Q4 2025 shows stakeholder confidence stabilising, with both current and future outlooks remaining firmly in optimistic territory.
The 47th edition of the index, which tracks sentiment across developers, investors, lenders and occupiers, indicates that the sector has adjusted to macro headwinds and is entering 2026 with more balanced expectations. Improved economic visibility, easing inflationary pressures and stable funding conditions have collectively helped restore confidence after the moderation seen earlier in the year.
Sentiment Scores Hold in Optimistic Zone
The Current Sentiment Score in Q4 2025 edged up to 60 from 59 in the previous quarter, while the Future Sentiment Score remained unchanged at 61. Although these readings are below the highs seen during 2023–24, they reflect a market that has found equilibrium rather than one losing momentum.
Resilient office demand, improving liquidity and stable domestic economic conditions continue to underpin expectations, even as global uncertainties persist. Stakeholders appear cautiously optimistic, signalling confidence in near-term fundamentals while remaining mindful of external risks.
Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India, said the index reflects a sector that has regained balance. Stronger macroeconomic indicators and disciplined decision-making across stakeholders have helped sustain sentiment despite a volatile global environment.
Macro Tailwinds Support Confidence
A key factor lifting sentiment has been the improvement in India’s macroeconomic outlook. Real GDP growth accelerated to 8.2 percent in Q2 FY2025–26, compared with 5.6 percent in the same period last year, reinforcing confidence among real estate stakeholders.
High-frequency indicators continue to suggest sustained economic momentum. Easing inflation, accommodative monetary conditions and continued public capital expenditure have improved growth visibility, helping offset concerns arising from global geopolitical and economic uncertainty.
These macro tailwinds have strengthened confidence across asset classes, supporting real estate fundamentals at a time when many global markets remain under pressure.
Funding Conditions Improve, Capital Remains Selective
Sentiment around funding availability improved during the quarter, with most respondents expecting liquidity conditions to remain stable or improve in the coming months. Policy continuity and a continued focus on quality assets have helped keep capital access supportive across real estate segments.
While lenders and investors remain selective, prioritising asset quality and underwriting discipline, funding conditions are no longer seen as a constraint. Institutional capital, in particular, continues to show interest in well-located, income-generating assets and projects with clear demand visibility.
This steady funding environment has encouraged cautious optimism, allowing developers to plan growth without resorting to aggressive leverage.
Zonal Sentiment Shows Broad-Based Optimism
The Q4 2025 index points to a broad-based improvement in sentiment across regions, with all zones remaining in the optimistic range.
The South Zone retained its leadership position with a future sentiment score of 62, supported by strong office leasing activity in Bengaluru and Hyderabad, along with resilient demand in higher ticket residential segments. The East Zone also improved to a score of 62, driven largely by steady mid-segment housing demand.
The West Zone strengthened to 62 as well, aided by stable commercial market activity and a calibrated approach to residential development. The North Zone recovered to 59, reflecting stabilising sentiment after softness earlier in the year, supported by steady office traction and ongoing infrastructure momentum.
The improvement across zones underscores confidence anchored in urban demand and improving macro conditions rather than isolated regional trends.
Institutional Confidence Rises, Developers Stay Disciplined
A notable divergence emerged between institutional stakeholders and developers during the quarter. Institutional players, including banks, financial institutions and private equity funds, reported a higher Future Sentiment Score of 63, reflecting rising confidence in asset quality and liquidity conditions.
Developers, by contrast, maintained a more measured stance, with a future sentiment score of 58. This gap highlights a market where capital providers remain supportive, while developers continue to prioritise demand visibility, inventory management and prudent capital deployment over rapid expansion.
The trend points to a maturing market environment marked by discipline rather than exuberance.
Residential Market Shows Signs of Stability
Residential real estate sentiment improved modestly in Q4 2025, supported by sustained demand in higher ticket size segments and a calibrated approach to new launches. Developers continue to align supply closely with demand conditions, focusing on inventory control rather than volume-driven growth.
While sales momentum has moderated from earlier peaks, demand in premium and upper-mid segments remains steady. Improving financing conditions have further reinforced confidence, particularly among end-users with stronger balance sheets.
Overall residential sentiment remains in the optimistic zone, signalling stability rather than a sharp rebound or downturn.
Office Market Anchors Overall Confidence
The office segment continues to be the strongest pillar of real estate sentiment. Leasing expectations remained firmly positive in Q4 2025, underpinned by sustained occupier demand, particularly from Global Capability Centres across major cities.
Limited availability of quality Grade A office space has encouraged early commitments and pre-leasing activity, reflecting forward-looking expansion plans by occupiers. The resulting supply-demand imbalance continues to support firm rental expectations, with most stakeholders anticipating rents to remain stable or rise.
Sentiment around new office supply has also improved, pointing to expectations of a stronger development pipeline ahead, even as current availability remains constrained.
Sector Enters 2026 on Steadier Ground
Parveen Jain, President, NAREDCO, said the index indicates strengthening confidence after a phase of mild moderation. Residential markets are showing clearer signs of stability, while the office segment remains resilient on the back of consistent leasing activity and corporate expansion.
The Q4 2025 Knight Frank–NAREDCO Real Estate Sentiment Index suggests that India’s real estate sector is entering 2026 on a steadier footing. Improving economic clarity, prudent capital deployment and demand-driven strategies across asset classes are setting the stage for measured growth, rather than speculative excess, in the year ahead.
