Real Estate Sentiment Firmly Grounded in Q4 2025: Positive Office Demand and Funding Conditions Boost Confidence

India’s real estate sector concluded 2025 on a steady note, with stakeholder sentiment stabilizing in the optimistic zone during the October-December 2025 quarter. This positive trend is supported by resilient office demand, improving macroeconomic visibility, and stable funding conditions, according to the latest Knight Frank-NAREDCO Real Estate Sentiment Index.

The 47th edition of the index shows that the Current Sentiment Score edged up marginally to 60 in Q4 2025 from 59 in the previous quarter, while the Future Sentiment Score remained unchanged at 61. Although sentiment levels remain below the peaks seen in 2023-24, the readings indicate that confidence has held firm after the moderation witnessed earlier in the year.

“The readings underscore a market supported by improving macroeconomic visibility, easing inflation, and steady funding conditions,” the Knight Frank-NAREDCO report stated. The index, jointly prepared by Knight Frank and NAREDCO, points to a market environment characterized by balanced expectations over the next six months, marked by easing inflation, clearer economic signals, and steady liquidity.

Parveen Jain, president of NAREDCO, noted, “The Q4 2025 Knight Frank–NAREDCO Real Estate Sentiment Index shows that confidence has strengthened after a phase of mild moderation. The improvement in current sentiment and the continued optimism in future sentiment suggest a market moving forward in a balanced manner. Residential markets are showing clearer signs of stability, supported by steady end-user demand and a disciplined approach to new supply. The office segment remains positive, backed by consistent leasing activity and corporate expansion. Improving macroeconomic visibility, easing inflation, and policy continuity have further reinforced broad-based confidence across regions.”

Macroeconomic momentum has played a crucial role in underpinning confidence. According to the survey, 52% of respondents expect overall economic momentum to improve, while 29% see conditions remaining unchanged. Only 19% anticipate a deterioration. On the funding front, sentiment also strengthened, with half of the respondents expecting availability of funding to improve and 41% projecting stable conditions. The findings suggest that while lenders and investors remain selective, capital availability continues to be supportive, particularly for quality assets.

Shishir Baijal, International Partner, Chairman, and Managing Director of Knight Frank India, commented, “The Q4 2025 Sentiment Index reflects a market that has found its balance after a period of moderation. Real GDP growth of 8.2% in Q2 FY 2025–26, compared with 5.6% in the same period last year, has reinforced confidence among stakeholders. High-frequency indicators continue to point to sustained economic momentum, helping offset global uncertainty and supporting real estate fundamentals. Confidence is supported by stronger macro visibility, steady funding conditions, and disciplined decision-making across stakeholders. Residential markets are benefiting from higher ticket size segment demand and calibrated supply, while the office sector continues to stand out on the back of robust leasing activity and firm rentals. Together, these factors point to a sector progressing on stable fundamentals.”

Regionally, future sentiment improved modestly across all zones, with every region remaining in optimistic territory. The South Zone retained the highest future sentiment score at 62, supported by strong office leasing activity in Bengaluru and Hyderabad and resilient demand in higher-ticket residential segments. The East Zone also improved to 62, driven by steady mid-segment housing demand. The West Zone strengthened to 62, aided by stable commercial market activity and a disciplined approach to residential development. The North Zone recovered to 59, reflecting a stabilization in sentiment after weakness in earlier quarters, supported by office traction and infrastructure-led activity.

A divergence in sentiment was visible across stakeholder groups. Institutional players, including banks, financial institutions, and private equity funds, recorded a higher Future Sentiment Score of 63, indicating rising confidence in asset quality and liquidity conditions. Developers, meanwhile, remained more cautious, with a future sentiment score of 58, reflecting a continued focus on demand visibility, inventory management, and prudent capital deployment.

In the residential segment, future sentiment improved during Q4 2025, led by sustained demand in higher-ticket size categories and a disciplined supply strategy. While sales momentum has moderated from earlier highs, developers are closely aligning new launches with demand conditions. Survey responses show that 40% of stakeholders expect residential sales to increase, while half anticipate an increase in new launches. Price expectations remained evenly split between stability and growth, signaling a largely balanced market outlook.

The office market continued to anchor overall confidence in the sector. Leasing sentiment remained firmly positive, driven by sustained occupier demand, particularly from Global Capability Centres across major cities. Limited availability of quality Grade A office space has encouraged early commitments and pre-leasing, while the supply-demand imbalance continues to support firm rental expectations. A majority of respondents expect leasing activity and new supply to increase, while nearly half anticipate rents to remain stable or rise.

Overall, the Knight Frank-NAREDCO index suggests that India’s real estate sector is entering 2026 on a more stable footing. Improving economic clarity, supportive funding conditions, and demand-driven strategies across residential and commercial segments are expected to underpin sentiment, even as stakeholders remain cautious amid an uncertain global environment.