Macroeconomic tailwinds to lift sentiment in India's realty sector: Report

India's real estate outlook remains upbeat as easing inflation, fiscal spending, premium housing demand, and strong office leasing fuel confidence, according to the Knight Frank-Naredco

India's real estate sector is expected to see robust growth as India’s overall economic momentum remains stable or improves, supported by easing inflation and robust fiscal spending, as per the Q3 sentiment index report by Knight Frank–Naredco.

 

On the residential front, new launches are expected to remain stable or increase, as developers prioritise higher-ticket projects and temper lower-ticket supply. Residential sales are likely to improve, supported by rate cuts, subvention schemes, and buyer-focused incentives.

 

India's office segment is expected to be supported by steady occupier demand and strong supply, with rents holding or increasing amid limited Grade A space. The sector remains buoyed by GCC expansion, IT-led leasing, and rising flex-space demand.

 

What does the Q3 2025 sentiment index reveal about market confidence?

 

The findings in the ‘Real Estate Sentiment Index Q3 2025 (July–September)’ report highlighted that the Current Sentiment Score rose to 59 in Q3 2025 from 56 in the previous quarter, indicating improving confidence among stakeholders, while the Future Sentiment Score remained stable at 61, maintaining its position in the optimistic zone.

 

Shishir Baijal, Chairman and Managing Director, Knight Frank India, said, “The sustained optimism reflected in the Q3 Sentiment Index underscores the sector’s resilience and adaptability. Both current and future sentiment scores remain comfortably in the positive zone, reaffirming confidence in India’s economic stability and long-term growth story.”

 

Improved confidence is being driven by stable interest rates, benign inflation, and robust domestic consumption, all of which continue to support growth. The Current Sentiment Score has reached its highest level of 2025 so far, reflecting a broad-based uplift across both developer and non-developer communities.

 

“Demand in the premium residential segment remains healthy, while the office market continues to demonstrate structural depth with strong leasing pipelines. Stable interest rates, easing inflation, and improved liquidity have reinforced overall sentiment. As we approach 2026, we expect the market to maintain steady momentum across asset classes,” added Baijal.

 

How did regional sentiment and stakeholder views evolve in Q3?

 

Zonal sentiment in Q3 2025 remained largely stable, with optimism nationwide. The South stayed most upbeat at 62, supported by strong leasing in Bengaluru and Hyderabad. The North edged up to 56 on steady NCR office activity. The East eased to 59, while the West dipped to 59 amid balanced office and residential trends.

 

Developers’ sentiment eased to 59 from 63, reflecting cautious optimism amid rising input costs and slower momentum in mid- to low-income housing. Non-developers such as banks, financial institutions, and private equity funds held steady optimism with a Future Sentiment Score of 61. This alignment signals confidence supported by ample liquidity and solid asset quality.

 

What are respondents expecting in residential and office segments?

 

About 71 per cent of respondents expect new launches in the residential sector to remain stable or increase, as developers prioritise higher-ticket projects and temper lower-ticket supply. Residential sales optimism has strengthened, with 74 per cent of respondents expecting stable or improved sales—up from 52 per cent in Q2 2025—supported by rate cuts, subvention schemes, and buyer-focused incentives.

 

Around 78 per cent foresee stable or moderately growing supply in the office segment, while 95 per cent expect rents to hold or increase amid limited Grade A space. The sector remains buoyed by GCC expansion, IT-led leasing, and rising flex-space demand.

 

What macroeconomic factors are lifting overall real estate sentiment?

 

The report also noted that macro and liquidity indicators remain favourable for real estate growth. Nearly 78 per cent of respondents expect India’s overall economic momentum to remain stable or improve, supported by easing inflation and robust fiscal spending.

 

Parveen Jain, President, Naredco, added, “The Knight Frank NAREDCO Real Estate Sentiment Index Q3 2025 reflects steady confidence in India’s property market. Developers and investors remain optimistic, supported by stable demand, policy continuity, and healthy funding conditions. Premium housing and office spaces drive growth, signalling a balanced, resilient outlook for the sector in the coming months.”

 

Despite global headwinds, structural fundamentals, steady policy support, and consistent demand from occupiers and end-users continue to drive optimism, said the report.