India’s real estate sector appears to have found its footing as it closes 2025. After a year marked by moderation and recalibration, stakeholder confidence has stabilised firmly in optimistic territory, according to the 47th edition of the Knight Frank–NAREDCO Real Estate Sentiment Index for Q4 2025 (October–December).
Both current and future sentiment scores remained above the crucial 50-mark, signalling optimism, even as the market adopts a more disciplined, fundamentals-driven approach. The data suggests that while the exuberance of 2023–24 has eased, confidence is now supported by stronger macroeconomic visibility, steady funding access, and resilient office demand.
Sentiment Scores Hold Steady in Optimistic Zone
The Current Sentiment Score rose marginally to 60 in Q4 2025, up from 59 in the previous quarter, while the Future Sentiment Score held steady at 61. These readings reflect balanced expectations for the next six months, following the moderation seen earlier in 2025.
Although sentiment remains below the highs of 2023–24, the stability itself is significant. It points to a market that has absorbed earlier headwinds and is now progressing on more sustainable fundamentals—backed by easing inflation, improving liquidity conditions, and steady domestic economic growth.
Macroeconomic Visibility and Funding Conditions Boost Confidence
A key driver behind stabilising sentiment has been the broader economic environment. India’s real GDP growth of 8.2% in Q2 FY 2025–26, compared to 5.6% in the same period last year, has reinforced stakeholder confidence.
Survey responses indicate:
- 52% of respondents expect economic momentum to improve
- 29% foresee stability
- Only 19% anticipate a slowdown
Funding sentiment also strengthened during the quarter. Over 90% of stakeholders expect funding availability to either improve or remain unchanged, reflecting policy continuity and a continued preference for quality assets. While lenders and investors remain selective, liquidity across asset classes remains supportive.
Office Market Continues to Anchor Overall Confidence
Among all asset classes, the office sector remains the strongest pillar of confidence. Robust leasing activity—especially from Global Capability Centres (GCCs)—has kept sentiment firmly positive across major cities.
Limited availability of quality Grade A office space has:
- Encouraged pre-leasing and early commitments
- Supported firm rental expectations
- Improved sentiment around future office supply pipelines
In Q4 2025:
- 58% of stakeholders expect leasing activity to increase
- 49% anticipate rental growth
- A majority expect supply additions to rise, signalling confidence in long-term occupier demand
Residential Markets Show Stability, Not Speculation
Residential sentiment improved modestly in Q4 2025, driven by steady demand in higher ticket-size segments and a disciplined approach to new launches. Developers are closely aligning supply with demand visibility, focusing on inventory management rather than aggressive expansion.
Survey data shows:
- 40% expect sales to increase
- 50% expect new launches to rise
- 46% foresee price growth
While sales momentum has softened compared to earlier peaks, improving financing conditions and stable end-user demand have kept residential sentiment firmly in the optimistic zone.
Zonal Sentiment Turns Broad-Based
For the first time in recent quarters, future sentiment improved across all regions, with every zone remaining in optimistic territory:
- South Zone (Score: 62): Continues to lead, supported by strong office leasing in Bengaluru and Hyderabad, along with resilient high-ticket residential demand.
- East Zone (Score: 62): Improved on the back of steady mid-segment housing demand.
- West Zone (Score: 62): Strengthened due to stable commercial activity and calibrated residential development.
- North Zone (Score: 59): Recovered after earlier softness, aided by office traction and ongoing infrastructure momentum.
The regional spread of optimism highlights confidence anchored in urban demand and improving macro conditions rather than speculative growth.
Institutions More Confident, Developers Remain Cautious
A notable trend in Q4 2025 is the divergence between institutional stakeholders and developers.
- Institutional investors, banks, and PE funds recorded a Future Sentiment Score of 63, reflecting confidence in asset quality and liquidity.
- Developers reported a lower score of 58, underscoring a cautious, demand-aligned approach to growth.
This gap indicates a healthier market dynamic—where capital is available, but deployment is guided by prudence rather than exuberance.
Sector Poised for a Steady 2026
Commenting on the findings, industry leaders highlighted that the market has transitioned from correction to consolidation. Residential markets are showing clearer signs of stability, while the office segment continues to outperform. Improved macro visibility, easing inflation, and disciplined capital deployment are reinforcing confidence across regions and asset classes.
As India’s real estate sector steps into 2026, the data suggests a steadier, more mature growth phase—driven by demand-led strategies, institutional confidence, and a renewed focus on fundamentals rather than speculative momentum.
Also Read: Real Estate Optimism Strengthens in Q3 2025 as Sentiment Index Climbs
