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

The post India Real Estate Enters 2026 on Stable Ground: Sentiment Holds Above 60, Office Market Leads Confidence Revival appeared first on Square Feat India.

Mumbai, November 15, 2025: The 46th Knight Frank–NAREDCO Real Estate Sentiment Index for Q3 2025 (July–September) shows continued optimism across India’s property market, reinforcing the sector’s resilience amid global economic headwinds.

The Current Sentiment Score increased to 59, up from 56 in Q2 2025 — the highest level recorded this year — while the Future Sentiment Score held steady at 61, remaining firmly in the optimistic zone.

Stronger market fundamentals, robust office leasing, resilient high-ticket residential demand, stable interest rates, and improved liquidity have collectively boosted industry confidence.

Market Fundamentals Improve Across Segments

The positive sentiment is driven by:

• Stable interest rates and eased inflation
• Healthy domestic consumption
• Strong momentum in premium residential sales
• Deepening office leasing pipelines
• Consistent macroeconomic policy environment

Both developers and financial institutions reported growing confidence, reflecting broad-based improvement across the sector.

South Leads Optimism; North Shows a Strong Rebound

Sentiment remained optimistic across regions:

• South Zone: Highest score at 62, driven by strong leasing in Bengaluru and Hyderabad and robust demand for high-value homes.
• North Zone: Rose to 56, supported by steady office activity in NCR.
• East Zone: Slight moderation to 59 amid lower residential launches.
• West Zone: Dipped marginally to 59, though strong office absorption in Mumbai and Pune cushioned residential softness.

Developers Cautious, Non-Developers Steady in Confidence

• Developers’ sentiment: Moderated to 59 from 63 as they remain cautious due to elevated input costs and slower mid–low segment demand.
• Non-developers (banks, institutions, PE funds): Maintained stable optimism, recording a Future Sentiment Score of 61.

This alignment suggests market confidence anchored in liquidity, asset quality, and sustained formal-sector investment.

Residential Market: High-Ticket Demand Drives Optimism

Residential sentiment remained strong in Q3 2025:

• 71% expect launches to remain stable or increase
• 74% expect sales to stay stable or improve
• 92% expect prices to remain stable or rise

NCR, Bengaluru, and Hyderabad continued to lead price growth with 13%–19% YoY increases, driven by demand in upper-mid and premium categories.

Office Market: Strongest Performer Across Asset Classes

The office market displayed the highest level of optimism:

• Leasing: 55% expect an increase
• Supply: 38% expect growth, 40% expect stability
• Rents: 95% expect stability or upward movement

Limited Grade A supply, GCC expansion, IT-led demand, and growing pre-commitments continue to support sector strength.

Favourable Economic & Funding Environment

• 78% foresee stable or improved economic momentum
• 86% expect funding conditions to stay stable or get better

Easing inflation, strong fiscal spending, active capital deployment into premium housing, and the RBI’s accommodative stance are helping sustain market momentum.

Expert Commentary

Knight Frank India CMD Shishir Baijal said the sustained optimism “underscores the sector’s resilience and adaptability,” noting that steady demand in premium housing and a strong office pipeline continue to shape a positive outlook.

NAREDCO President Parveen Jain added that confidence remains supported by “policy continuity, stable demand, and healthy funding conditions,” especially in premium housing and office segments.

Conclusion

The Knight Frank–NAREDCO Sentiment Index for Q3 2025 reaffirms that India’s real estate sector remains on a solid growth trajectory. With inflation moderated, funding robust, and demand consistently strong across asset classes, the sector enters Q4 2025 with firm confidence and balanced growth expectations.

Also Read: Realty Stocks Close First Day of the Week on a Firm Note: DLF, Godrej, Lodha Lead Gains as Festive Tailwinds Persist

The post Real Estate Optimism Strengthens in Q3 2025 as Sentiment Index Climbs appeared first on Square Feat India.

The Current Sentiment Score dropped to 54 in Q1 2025 from 59 in Q4 2024. Similarly, the Future Sentiment Scoreeased to 56, reflecting a subtle but clear shift toward caution due to global economic volatility, regional tensions, and consumption softening. Despite this dip, both scores remain above 50 — indicating continued, albeit restrained, optimism.

Residential Market Sees Cooling Demand

The residential segment, particularly in the mid- and lower-ticket categories, is seeing signs of slowing demand:

• Only 22% of stakeholders expect residential sales to increase, a sharp decline from 73% in Q1 2024.
• 93% believe that prices will either remain stable or rise, although the share expecting actual price increases has dropped to 50%, down from 82% a year ago.
• New launches are also expected to slow, with only 28% of stakeholders anticipating growth in supply.

This reflects a shift toward pricing stability and recalibration of supply strategies, particularly in response to affordability concerns in the mass housing segment.

Office Sector Emerges as a Bright Spot

In contrast, the office segment continues to perform strongly:

• 82% of respondents expect office leasing volumes to increase or remain steady.
• 91% foresee stable or rising rental values, signaling strong occupier confidence.
• Although only 24% expect an increase in new office supply, high demand absorption is keeping the segment resilient.

Key demand drivers include Global Capability Centres (GCCs), IT services, and flex space operators, particularly in metro markets like Bengaluru, Hyderabad, and Pune.

Developers & Financial Institutions: A Cautious Stance

• The Developer Future Sentiment Score declined to 53, as developers adopt a more demand-led approach and focus on high-ticket projects.
• The Non-Developer Sentiment Score — which includes banks, financial institutions, and private equity funds — also fell slightly to 57, indicating a wait-and-watch approach on capital deployment.

Both groups remain selectively optimistic, especially about premium residential and commercial real estate, while being conservative about mass housing and speculative launches.

Macroeconomic Sentiment Dips Amid Global Headwinds

Economic expectations have softened:

• Only 55% of stakeholders believe the economic momentum will improve or stay the same — significantly down from 91% in Q1 2024.
• Global trade tensions and regional instability are contributing to uncertainty.

However, recent RBI repo rate cuts in February and April 2025 have improved liquidity and borrowing sentiment, with 79% of respondents expecting funding availability to improve or remain stable.

Industry Leaders Weigh In

Shishir Baijal, Chairman and Managing Director of Knight Frank India, commented:

“Q1 2025 marks a phase of strategic recalibration for the sector. Premium residential and commercial segments continue to display strength, underlining the industry’s long-term resilience.”

Hari Babu, President of NAREDCO, added:

“This marginal dip in sentiment is not a sign of decline, but of maturity. The industry is moving forward cautiously but confidently, adapting to shifting market dynamics.”

Conclusion

The Q1 2025 Sentiment Index highlights a sector at a crossroads — cautiously optimistic but highly strategic. While residential demand in the affordable and mid-income segments moderates, premium housing and commercial office spaces continue to drive the industry forward. With liquidity improving and developers adapting quickly, Indian real estate remains on stable ground despite external challenges.

Also Read: MahaRERA Becomes First in India to Cross 50,000 Housing Project Registrations

The post Q1 2025 Sentiment Index: Housing Slows, Office Market Holds Strong appeared first on Square Feat India.