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The Real Estate Future Sentiment Score held steady at 50, signalling that the sharp deterioration witnessed in Q1 2026 has levelled off, according to the 49th edition of the Knight Frank-NAREDCO Real Estate Sentiment Index for Q2 2026.
The future score of 50 indicates that market participants expect current operational challenges to persist over the next six months without deepening further. Developer sentiment remained flat at 51 quarter-on-quarter, holding slightly above the neutral mark. Meanwhile, non-developer stakeholders, including banks, financial institutions, and private equity investors, saw an improvement in sentiment, with their score rising to 53 from 50 in the previous quarter. While the Current Sentiment Score softened marginally to 48 from 49 in the previous quarter, remaining in the pessimistic zone, the broader real estate sector in India is entering a phase of stabilisation despite persistent global macroeconomic headwinds. External pressures such as geopolitical tensions, volatile energy prices, and persistent inflation have continued to weigh on short-term market confidence. However, sustained occupier demand in commercial office space and the resilience of the domestic economy suggest that stakeholder sentiment is beginning to steady. Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India, highlighted the underlying stability across asset classes. "The real estate sector continues to navigate a complex global environment characterised by geopolitical tensions, inflationary pressures and volatile energy markets. While these factors have weighed on current sentiment, the more significant takeaway from this quarter's findings is the sharp decline witnessed in the previous quarter has levelled off, with future sentiment holding steady at the neutral threshold," Baijal said. "The residential market is transitioning into a phase of normalisation after a prolonged growth cycle, while the office segment continues to demonstrate resilience supported by robust leasing activity and sustained occupier demand. India's strong domestic fundamentals, coupled with its position as the fastest-growing major economy, continue to provide confidence in the sector's long-term growth prospects," he added. Across regions, sentiment hovered near the neutral mark. The North Zone recovered modestly to 52, aided by healthy office market activity, while the West Zone recorded a score of 50. The South and East Zones maintained a cautious outlook as stakeholders monitored evolving economic developments. Parveen Jain, National President, NAREDCO, noted that external economic pressures are being absorbed by strong domestic fundamentals. "The current score has slipped a point to 48, reflecting a global environment that remains fast-evolving and difficult to read. The future score, however, holds firm at the neutral threshold of 50 -- a signal that stakeholders see the challenges persisting rather than deepening, and that the sharp decline of the previous quarter has levelled off," Jain stated. "Residential is settling into a more mature phase, a normalisation rather than a weakening, while office continues to anchor the market with resilient leasing and firm rents. The pressures at play are external in origin, and India's real estate fundamentals remain robust enough to absorb them," he noted. In the residential segment, housing sales across major markets rose 1 per cent year-on-year in H1 2026, pointing to a transition toward consolidation. Meanwhile, commercial office transactions reached 48 million square feet in H1 2026, registering a minor 2 per cent drop against an exceptionally high base year. Funding conditions remained broadly steady, with half of all survey respondents expecting capital availability to remain unchanged over the next six months. (ANI)
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