India’s real estate sector is showing signs of recovery after nearly a year of subdued sentiment, with stakeholders including developers, financiers, and occupiers looking beyond short-term global headwinds.
Improved macroeconomic conditions, such as a cumulative 100 basis-point repo rate cut by the Reserve Bank of India, robust GST collections, a six-year low in consumer inflation, have eased liquidity, lowered borrowing costs, and supported investment decisions.
This has helped reset expectations for the remainder of 2025. The current sentiment score rose to 56 in June quarter from 54, ending a four-quarter decline, showed a Knight Frank-NAREDCO assessment. The future sentiment score increased more sharply to 61 from 56, reflecting stronger confidence in the sector’s medium-term outlook.
Stakeholders are drawing on India’s structural economic resilience and steady demand in premium residential and office segments to guide near-term strategies.
“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 led by the south. Developers’ outlook has strengthened amid improved liquidity and lower borrowing costs. Backed by record GST collections and monetary easing, India’s realty sector appears well positioned for sustained growth through the rest of 2025,” said Hari Babu, president, NAREDCO.
Key markets such as Bengaluru, Hyderabad, Mumbai, and Pune are leading the rebound, supported by strategic project launches and steady end-user demand.
“This 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, CMD, Knight Frank India.
The rise in pre-leasing activity, strategic launch planning, and lender confidence, according to him, underscores the industry’s growing maturity.
Realty developers have shown a marked uptick in confidence, with their future sentiment score rising to 63 during the second quarter from 53 in March quarter. Easing financing conditions, reduced cost of funds, and consistent demand for high-value residential and commercial properties have supported this change.
Non-developer stakeholders, including banks, non-banking finance companies (NBFCs), and private equity investors, have also reported improved sentiment, with their score moving up to 60 from 57.
In residential markets, about 70% of stakeholders expect launches to stay the same or increase. The premium and luxury segments, particularly projects priced above Rs 1 crore, are witnessing continued traction, while activity in mid- and lower-income housing remains constrained due to affordability pressures and tighter margins.
The office segment continues to perform steadily. Around 80% of stakeholders expect leasing volumes to remain stable or grow, with demand being led by GCCs, third-party IT firms, and flex-space operators. Tight supply in core markets is also driving rental expectations upward as 93% of respondents anticipate rents to remain firm or rise.
Funding sentiment has also improved. In the June quarter, 90% of stakeholders expected capital availability to remain the same or improve, up from 79% in the previous quarter. The share of respondents who foresee improved access to funding rose to 40%, compared to 36% in the previous quarter.
As both residential and commercial segments realign to macro and policy tailwinds, the second quarter marks a shift in market sentiment, with stakeholders positioning themselves for a more stable and selectively growth-oriented second half of 2025.
Improved macroeconomic conditions, such as a cumulative 100 basis-point repo rate cut by the Reserve Bank of India, robust GST collections, a six-year low in consumer inflation, have eased liquidity, lowered borrowing costs, and supported investment decisions.
This has helped reset expectations for the remainder of 2025. The current sentiment score rose to 56 in June quarter from 54, ending a four-quarter decline, showed a Knight Frank-NAREDCO assessment. The future sentiment score increased more sharply to 61 from 56, reflecting stronger confidence in the sector’s medium-term outlook.
Stakeholders are drawing on India’s structural economic resilience and steady demand in premium residential and office segments to guide near-term strategies.
“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 led by the south. Developers’ outlook has strengthened amid improved liquidity and lower borrowing costs. Backed by record GST collections and monetary easing, India’s realty sector appears well positioned for sustained growth through the rest of 2025,” said Hari Babu, president, NAREDCO.
Key markets such as Bengaluru, Hyderabad, Mumbai, and Pune are leading the rebound, supported by strategic project launches and steady end-user demand.
“This 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, CMD, Knight Frank India.
The rise in pre-leasing activity, strategic launch planning, and lender confidence, according to him, underscores the industry’s growing maturity.
Realty developers have shown a marked uptick in confidence, with their future sentiment score rising to 63 during the second quarter from 53 in March quarter. Easing financing conditions, reduced cost of funds, and consistent demand for high-value residential and commercial properties have supported this change.
Non-developer stakeholders, including banks, non-banking finance companies (NBFCs), and private equity investors, have also reported improved sentiment, with their score moving up to 60 from 57.
In residential markets, about 70% of stakeholders expect launches to stay the same or increase. The premium and luxury segments, particularly projects priced above Rs 1 crore, are witnessing continued traction, while activity in mid- and lower-income housing remains constrained due to affordability pressures and tighter margins.
The office segment continues to perform steadily. Around 80% of stakeholders expect leasing volumes to remain stable or grow, with demand being led by GCCs, third-party IT firms, and flex-space operators. Tight supply in core markets is also driving rental expectations upward as 93% of respondents anticipate rents to remain firm or rise.
Funding sentiment has also improved. In the June quarter, 90% of stakeholders expected capital availability to remain the same or improve, up from 79% in the previous quarter. The share of respondents who foresee improved access to funding rose to 40%, compared to 36% in the previous quarter.
As both residential and commercial segments realign to macro and policy tailwinds, the second quarter marks a shift in market sentiment, with stakeholders positioning themselves for a more stable and selectively growth-oriented second half of 2025.
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