India's real estate sentiment stabilises in Q2; office market remains resilient: Knight Frank–NAREDCO
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India's real estate sector showed signs of stabilisation in the second quarter of 2026, with future sentiment holding steady despite persistent geopolitical and macroeconomic uncertainties, according to the latest Knight Frank–NAREDCO Real Estate Sentiment Index.
The 49th edition of the index for Q2 2026 (April–June) showed the Current Sentiment Score easing marginally to 48 from 49 in the previous quarter, remaining below the neutral mark of 50. However, the Future Sentiment Score remained unchanged at 50, indicating that the sharp deterioration in sentiment witnessed during Q1 has levelled off.
The report attributed the cautious mood to global headwinds, including geopolitical tensions, volatile energy prices, and inflationary pressures. However, India's resilient domestic economy, sustained office leasing activity and improving confidence across key market indicators have helped arrest the decline in sentiment.
"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 that the sharp decline witnessed in the previous quarter has levelled off, with future sentiment holding steady at the neutral threshold," said Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India.
He added that while the residential market is entering a phase of normalisation after an extended growth cycle, the office segment continues to remain resilient, supported by robust leasing activity and sustained occupier demand.
Developers remain cautious, investors turn optimistic
Developer sentiment remained unchanged at 51, marginally above the neutral threshold, reflecting a cautious outlook as the post-pandemic optimism continues to moderate.
In contrast, sentiment among non-developer stakeholders—including banks, financial institutions, and private equity investors—improved, with the score rising to 53 from 50 in the previous quarter. According to the report, the improvement suggests that capital providers have become more comfortable with prevailing market conditions after reacting sharply to global uncertainties in the first quarter.
North leads regional recovery
Regionally, sentiment remained broadly neutral across the country. The North Zone recorded the strongest improvement, with its sentiment score rising to 52, supported by robust office market activity. The West Zone remained stable at 50, while the South and East continued to exhibit cautious sentiment amid evolving economic and geopolitical conditions.
Outlook improves
The report also found that stakeholder confidence in the broader economy has improved compared with the previous quarter.
The share of respondents expecting economic conditions to deteriorate over the next six months fell sharply to 36%, down from 50% in Q1 2026. Meanwhile, 31% expect economic conditions to improve, reflecting easing concerns over global growth and geopolitical risks.
Knight Frank said India's position as the world's fastest-growing major economy continues to underpin long-term confidence in the real estate sector.
Funding conditions remain stable
Funding sentiment remained largely unchanged, with 50% of respondents expecting capital availability to remain stable over the next six months, while 19% foresee an improvement.
As per the report, although private equity investments in Indian real estate moderated during the first half of 2026 amid tighter global financial conditions, investors continue to favour high-quality assets and projects backed by strong execution capabilities.
The report concluded that India's real estate sector is adapting to a more challenging global environment without losing confidence in its long-term growth prospects. While the residential market is entering a phase of cyclical consolidation after several years of strong growth, the office segment continues to outperform on the back of healthy leasing demand and firm rental growth.