Market Sentiment Overview
The Q4 2025 Knight Frank–NAREDCO Real Estate Sentiment Index revealed a strengthened market confidence after a period of moderation. The Current Sentiment Score
edged up marginally to 60, while the Future Sentiment Score remained at 61. This indicates a balanced market outlook with residential markets displaying signs of stability. Steady end-user demand and a disciplined approach to new supply have bolstered residential sales. The office segment remains positive, with consistent leasing activity and corporate expansions. Key drivers behind this positive shift include improving macroeconomic visibility, easing inflation, and policy continuity. These factors have reinforced broad-based confidence across the regions. While sentiment levels are below the peaks of 2023-24, the findings show that confidence has held firm following the earlier-year moderation.
Residential Market Dynamics
The residential segment experienced improved future sentiment during Q4 2025, largely supported by continuous demand in higher-ticket size categories. Developers have closely aligned their new launches with the evolving market demand. According to survey responses, around 40% of stakeholders anticipate an increase in residential sales, while 50% expect a rise in new launches. Price expectations remained divided between stability and growth, suggesting a balanced outlook. This balanced scenario underscores the impact of factors such as improved macroeconomic visibility, easing inflation, and consistent funding conditions. Moreover, the residential sector is benefiting from demand in the higher ticket size segment and a more structured supply approach, contributing to the sector's overall stability.
Regional Sentiment Analysis
Future sentiment saw modest improvements across all zones during Q4 2025, with all regions maintaining optimistic positions. The South Zone retained the highest future sentiment score at 62, boosted by substantial office leasing in Bengaluru and Hyderabad, alongside robust demand in higher-ticket residential segments. The East Zone also rose to 62, driven by steady mid-segment housing demand. The West Zone strengthened to 62, supported by stable commercial market activity and a disciplined approach to residential development. The North Zone recovered to 59, reflecting stabilization after previous weakness, thanks to office traction and infrastructure-led activity. Each region’s performance highlights the diverse drivers supporting the market's overall improvement and provides a deeper understanding of the local market dynamics influencing sentiment.
Stakeholder Perspectives
A divergence in sentiment was noted across different stakeholder groups. Institutional players, including banks and private equity funds, recorded a higher Future Sentiment Score of 63, reflecting growing confidence in asset quality and liquidity. Conversely, developers showed more caution, with a future sentiment score of 58. This caution among developers reflects their focus on demand visibility, inventory management, and careful capital deployment. This contrast highlights the varied perspectives within the market and reveals the differing levels of optimism among various participants. These varying viewpoints are critical for understanding the market's nuanced dynamics.
Macroeconomic Influence
Macroeconomic momentum played a significant role in fostering confidence. According to the survey, 52% of respondents anticipate improving overall economic momentum, with 29% expecting conditions to remain unchanged. Only 19% foresee a decline. Funding conditions also strengthened, with half of the respondents anticipating improved funding availability and 41% projecting stability. While lenders and investors remain selective, capital availability continues to be supportive, especially for quality assets. Moreover, the Real GDP growth of 8.2% in Q2 FY 2025–26, compared to 5.6% in the same period last year, further boosted stakeholder confidence, reinforcing the positive economic outlook.
Office Market Performance
The office market continued to be a major factor in overall confidence within the sector. Leasing sentiment remained strong, driven by sustained occupier demand, especially from Global Capability Centres in key cities. Limited availability of Grade A office space encouraged early commitments and pre-leasing. Simultaneously, the supply-demand imbalance continues to support firm rental expectations. Most respondents expect an increase in leasing activity and new supply, while almost half anticipate stable or rising rents. The sector’s robust performance is a key indicator of its contribution to the overall positive sentiment and highlights its importance in the real estate market.
