Indian Real Estate Sector Shows Renewed Optimism Amid Strong Sentiment: Report
The Indian real estate sector is experiencing a resurgence in confidence, as the Sentiment Index rose to 56 in Q2 2025, marking a significant shift from the previous downward trend.
Real EstateSentiment IndexDeveloper ConfidenceEconomic IndicatorsMarket RecoveryReal Estate NewsJul 29, 2025
The ‘Future Sentiment Score’ also climbed to 61 in the quarter from 56 a quarter ago, signaling a renewed sense of confidence and cautious optimism about the sector’s performance in the next six months, according to the Knight Frank-NAREDCO ‘Real Estate Sentiment Index for Q2 2025 (April-June).’
This marks a significant shift in the mood of the Indian real estate sector. Following a year-long moderation in sentiment, stakeholders are beginning to look beyond short-term global uncertainties and are anchoring their expectations on India’s structural economic strength, accommodative monetary policy, and robust demand in premium residential and office segments.
“Q2 2025 represents a turning point for the real estate industry with the recovery in both current and future sentiment scores reflecting the sector’s resilience and adaptability. As high-frequency indicators show sustained momentum, stakeholders are repositioning their strategies for long-term growth, especially in premium and high-yielding asset classes,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.
One of the most encouraging signs in this quarter’s index is the resurgence in developer confidence. The sentiment among developers has seen a sharp increase, with their Future Sentiment Score rising from 53 in Q1 to 63 in Q2 2025. This change is largely attributable to easing financing conditions, falling borrowing costs following a 100-BPS cumulative repo rate cut by the Reserve Bank of India in H1 2025, and a visible pick-up in high-ticket residential demand.
Notably, non-developer stakeholders, which include banks, NBFCs, and private equity funds, have also reported a more positive sentiment this quarter, the report mentioned. Geographically, the rebound in sentiment is visible across all four regions of the country.
The north zone, which had hit a post-COVID low of 48 in Q1 2025, recovered to a score of 55 in Q2 2025, buoyed by improving infrastructure connectivity, a resurgence in demand in Delhi-NCR, and a shift in developer focus toward premium inventory. The West zone saw an increase from 58 to 61, underpinned by continued strength in markets like Mumbai and Pune, which are seeing a consolidation of residential supply and sustained demand for office space.
The South zone emerged as the strongest performer with a score of 63, up from 58, thanks to the commercial resilience of Bengaluru and Hyderabad and rising demand for lifestyle-led homes in key micro-markets. Meanwhile, the East zone held steady at 61, with Kolkata’s residential segment showing consistent mid-market activity and buyer confidence, the report mentioned.
The premium and luxury categories, particularly those priced above Rs 1 crore, continue to perform well. Developers are showing strategic maturity by focusing on select high-performing micro-markets. The sentiment around residential pricing is notably strong. In Q2 2025, 94 per cent of stakeholders expected prices to remain stable or increase at par with the previous quarter.
“This recovery is led by steady office leasing — particularly by GCCs and flex operators — and strong demand for premium housing. Regionally, sentiment has picked up across the board, with the South leading at 63,” said Hari Babu, President, NAREDCO.
Frequently Asked Questions
What is the Sentiment Index for the Indian real estate sector in Q2 2025?
The Sentiment Index for the Indian real estate sector in Q2 2025 rose to 56, up from 54 in Q1 2025, indicating a positive shift in market sentiment.
What factors are driving the renewed confidence in the Indian real estate sector?
The renewed confidence is driven by improving macroeconomic indicators, accommodative monetary policy, robust demand in premium residential and office segments, and easing financing conditions.
How has developer sentiment changed in Q2 2025?
Developer sentiment has seen a sharp increase, with their Future Sentiment Score rising from 53 in Q1 to 63 in Q2 2025, largely due to easing financing conditions and a pick-up in high-ticket residential demand.
Which region of India showed the strongest performance in the real estate sector in Q2 2025?
The South zone emerged as the strongest performer with a score of 63, up from 58, thanks to the commercial resilience of Bengaluru and Hyderabad and rising demand for lifestyle-led homes.
What is the sentiment around residential pricing in Q2 2025?
In Q2 2025, 94 per cent of stakeholders expected residential prices to remain stable or increase, indicating a strong sentiment around residential pricing.
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