In the first quarter of 2026, the sentiment within India's real estate sector has shifted towards a more cautious outlook, largely influenced by global economic volatility. According to a report released by Knight Frank and NAREDCO, the Current Sentiment Score of the quarterly index experienced a significant drop, falling to 49 from the previous score of 60. Similarly, the Future Sentiment Score has eased to a neutral 50, down from 61. This decline reflects the growing apprehension among stakeholders regarding economic conditions and the availability of funding, as the index captures both supply-side perspectives and insights from financial institutions.
The moderation in sentiment is primarily attributed to external factors, notably global macroeconomic fluctuations and elevated crude oil prices, which have exacerbated inflationary trends. These conditions have increased construction and logistics costs, thereby impacting the viability of ongoing and upcoming projects. While India’s economic fundamentals remain fairly stable, geopolitical tensions have begun to influence the dynamics of real estate demand and supply. As a result, residential activity, which had previously been on a growth trajectory, is now showing signs of recalibration. Sales and new launches have moderated during the first quarter of 2026, suggesting a potential cooling period for the sector.
The report indicates that approximately 52 percent of respondents anticipate a decline in housing sales, despite 73 percent expecting property prices to either rise or remain stable. This divergence between waning demand and resilient pricing underscores the structural cost challenges currently shaping the market. Rising costs associated with materials, labor, and financing are contributing to a complex landscape where price stability is maintained even as demand softens. Praveen Jain, National President of NAREDCO, emphasized that this moderation in sentiment should be viewed as a temporary adjustment, reflecting short-term caution rather than a fundamental weakness in the residential market's underlying strength. He noted that continued end-user demand, alongside steady price appreciation, supports the market's resilience.
Looking ahead, nearly half of the stakeholders surveyed expect fewer new project launches in the near term, which could further impact market dynamics. Conversely, the outlook for the office segment remains robust, with 41 percent of respondents predicting an improvement in leasing demand. This positive sentiment is mirrored in the office supply outlook, where almost half of the stakeholders foresee an increase in completions, while others expect stable or reduced supply levels. As the industry navigates these evolving conditions, stakeholders are advised to remain vigilant and adapt to the shifting economic landscape, balancing caution with opportunities for growth.