In the first quarter of 2026, India's real estate sector has witnessed a shift in stakeholder sentiment, now entering a cautious phase due to the impact of global macroeconomic volatility. A recent report by Knight Frank and NAREDCO reveals a decline in the Current Sentiment Score from 60 to 49, while the Future Sentiment Score has stabilized at 50, down from 61. This index reflects the perspectives of supply-side stakeholders and financial institutions regarding economic conditions and funding availability, indicating a growing unease in the market.
The report attributes this moderation in sentiment largely to global economic uncertainties, notably rising crude oil prices that have exacerbated inflationary trends. These trends, in turn, have escalated construction and logistics costs, significantly affecting project viability. Despite India's relatively stable economic fundamentals, geopolitical tensions are beginning to influence the demand and supply dynamics within the real estate sector. Residential activity has shown signs of recalibration after a period of sustained growth, with both sales and new property launches moderating in this quarter.
Looking ahead, a significant 52 percent of stakeholders anticipate a decline in housing sales, while 73 percent expect property prices to either rise or remain stable due to increasing costs associated with materials, labor, and loans. This contrast between weakening demand sentiment and stable pricing expectations underscores the structural cost challenges currently affecting the residential market. Praveen Jain, National President of NAREDCO, commented on this trend, stating that the moderation of sentiment among stakeholders reflects a short-term caution rather than a sign of weakness in the residential market's overall strength. He characterized the recent softening in sentiment as a natural adjustment following an extended growth period, emphasizing that consistent end-user demand and ongoing price appreciation are key factors supporting market resilience.
In contrast to the residential sector, the outlook for the office segment remains robust, with 41 percent of respondents expecting an improvement in leasing demand. This positive sentiment is mirrored in the office supply forecast, with nearly half of stakeholders predicting an increase in project completions, while others expect stable or reduced supply levels. As the market navigates these mixed signals, it will be crucial for stakeholders to remain vigilant and adaptable in response to the evolving economic landscape and its implications for the real estate sector.