Real estate sentiment improves in Q2 2025 as demand, liquidity and policy support boost outlook: NAREDCO Index
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Developers take the lead in confidence surge
Premium housing fuels residential recovery
Commercial office market remains resilient
Improved liquidity and macroeconomic stability
Industry poised for sustained growth
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After a year-long moderation, optimism has returned to India's real estate sector, driven by macroeconomic stability , accommodative policy, and robust demand in premium housing and office spaces. The Q2 2025 Knight Frank–NAREDCO Real Estate Sentiment Index reveals a marked improvement in confidence among developers, investors, and institutions.According to the 45th edition of the index, the Current Sentiment Score rose to 56 in Q2 2025 from 54 in the previous quarter, while the Future Sentiment Score jumped to 61, up from 56. Both figures reflect a shift toward optimism after four quarters of cautious outlook.A confluence of favorable economic indicators—including a six-year low in CPI inflation (3.2%), record GST collections of Rs 2.4 lakh crore, and a 100-basis-point rate cut by the RBI in H1 2025—has helped rejuvenate stakeholder sentiment. These developments have improved liquidity, lowered borrowing costs, and sparked confidence in high-value residential and commercial segments.'This quarter marks a turning point,' said Shishir Baijal, Chairman and MD, Knight Frank India. 'Improved macro fundamentals and maturing sector strategies are enabling stakeholders to realign toward long-term growth, especially in premium and yield-accretive assets.'Developers exhibited the sharpest rise in confidence, with their Future Sentiment Score climbing from 53 to 63. Factors such as easier financing, stronger demand for luxury housing, and sustained commercial leasing in urban hubs are reinforcing their outlook.Non-developer participants—banks, NBFCs, and private equity players—also reflected higher optimism, with their sentiment score increasing to 60 from 57. Structured funding opportunities in premium residential and office markets continue to attract institutional capital.Across regions, sentiment rebounded, with the South leading at a score of 63, thanks to resilient markets like Bengaluru and Hyderabad. The North, previously hit by post-COVID uncertainty, rose from 48 to 55, while the West and East maintained a strong footing at 61 each.A strong 70% of stakeholders expect residential launches to remain stable or grow, with a marked preference for premium homes priced above Rs 1 crore. However, developers remain cautious on affordable housing due to tight margins and rising costs.Price expectations also held strong, with 94% of stakeholders anticipating stable or rising prices, backed by double-digit year-on-year growth in cities like Bengaluru, Delhi-NCR, and Chennai.The office segment continues to perform well, buoyed by demand from Global Capability Centres (GCCs), third-party IT firms, and flex-space operators. About 80% of respondents foresee leasing volumes staying strong or improving, while 93% expect rentals to remain stable or rise.Bengaluru, Hyderabad, and Pune remain focal points, despite tight Grade A supply. Developers are taking a cautious approach to new commercial development, focusing instead on meeting targeted residential demand.Improved credit availability, thanks to the RBI's 100-bps rate cut, has significantly boosted funding sentiment. Ninety percent of stakeholders expect access to capital to stay stable or improve, compared to 79% in the previous quarter.Additionally, robust macroeconomic indicators—ranging from record GST collections to an expanding PMI—have added to the positive outlook. About 70% of stakeholders now expect India's economic momentum to sustain or improve, up from 55% in Q1.Hari Babu, President of NAREDCO, noted that the Q2 results signal the sector's growing resilience. 'Backed by lower borrowing costs, policy support, and strong demand for premium real estate, India's property market is on a strong footing for continued growth through 2025,' he said.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
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