News: Knight Frank-NAREDCO Sentiment Index Falls to 49 in Q1 2026-06-05-2026

Sentiment among real estate developers and financial institutions has turned cautious, with the outlook guarded at least until September, according to the Q1 2026 Real Estate Sentiment Index released by Knight Frank and NAREDCO.

The 48th edition of the index, covering January-March 2026, shows the Current Sentiment Score falling sharply to 49 from 60 points in Q4 2025, into pessimistic territory. The Future Sentiment Score is at a neutral 50, down from 61. On the index, 50 denotes a neutral view, a reading above it positive sentiment and one below it negative sentiment. The quarterly survey captures how supply-side stakeholders and financial institutions view the sector, economic conditions and funding availability.

The report described a "notable departure" from the sustained optimism of recent years. It attributed this to global macroeconomic volatility, elevated crude oil prices that have fed inflation and raised construction and logistics costs, and tighter financial conditions. Although India’s economic fundamentals remain largely stable, geopolitical conditions are starting to affect demand and supply, it said.

Sentiment weakened in every zone compared with the previous quarter. The North and South moved into pessimistic territory, while the West stayed above the neutral mark despite some moderation in demand.

Non-developer stakeholders, including financial institutions and investors, recorded a sharp fall in confidence, with their future sentiment score dropping to 50 from 63 in Q4 2025. Developers’ future score eased to 51 from 58. The report said this points to rising risk sensitivity among capital providers even as developers remain cautiously optimistic.

In housing, sales and new launches moderated in Q1 2026 after a long growth cycle. Some 52% of respondents expect housing sales to drop, and nearly half expect fewer launches, a shift from the stronger activity of early 2025. Prices are holding up: 73% expect them to rise or remain stable, and 27% foresee a decline. Higher costs of materials, labour and financing are supporting prices and are likely to be passed on to buyers.

The office segment remains the bright spot. Leasing hit a record high in Q1 2026, and limited supply in key markets is supporting rents, with stakeholders expecting stable to improving leasing momentum.

Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India, said the moderation reflects global uncertainties, particularly energy market disruptions and geopolitical tensions, and that the sector is entering a phase of cautious recalibration. He said housing is seeing a natural moderation while offices are supported by strong occupier demand, and expects stakeholders to stay in "wait-and-watch" mode in the near term.

Praveen Jain, National President-NAREDCO, said the softening reflects short-term caution rather than any weakening of the residential market’s underlying strength, with end-user demand and steady price appreciation continuing to support resilience.