May 19, 2025: According to a joint report by Knight Frank and NAREDCO, the Current Sentiment Score in Q1 2025 dipped slightly to 54 down from 59 in Q4 2024 while the Future Sentiment Score eased to 56 compared to 59 in the previous quarter. Though both scores, remain in the optimistic zone, signal growing stakeholder caution amid global trade tensions, economic recalibration and regional volatility. Despite this, positive momentum in commercial real estate and sustained activity in high-value residential segments continue to support sentiment resilience. According to the survey findings, residential outlook leans toward stability amid cautious launch plans. In Q1 2025, 93% of stakeholders expect residential prices to remain stable or improve while 67% anticipate stability or growth in new launches. Residential sales sentiment, however, has moderated with only 50% expecting it to either improve or stay the same compared to 88% in Q1 2024.
The office segment remains a bright spot, supported by robust leasing activity and stable rental growth. The quarterly report titled ‘Knight Frank – NAREDCO Real Estate Sentiment Index Q1 2025 (January–March 2025)’ highlighted that in Q1 2025, 82% of stakeholders anticipate office leasing volumes to either hold steady or increase, while 91% expect office rents to remain stable or rise—signalling sustained occupier confidence and healthy demand.
The report captures the current and future sentiments towards the real estate sector as well as economic conditions and funding availability as perceived by the supply-side stakeholders and financial institutions. A score of 50 represents a neutral view or status quo; a score above 50 demonstrates a positive sentiment and a score below 50 indicates a negative sentiment.
Sentiments of developers and non-developers
The Developer Future Sentiment Score dropped to 53 in Q1 2025 from 58 in Q4 2024, as developers recalibrate supply strategies amid slowing low to mid ticket size segment demand in the residential sector and rising costs. The Non-Developer Future Sentiment Score (including banks, financial institutions and PE funds) moderated to 57 from 60, reflecting a wait-and-watch approach on capital deployment, while remaining optimistic on office and high-ticket size residential segments.
Shishir Baijal, chairman and managing director, Knight Frank India, said, “Q1 2025 marks a phase of strategic recalibration for the real estate sector, shaped by evolving global trade dynamics, softening consumption, and heightened geopolitical sensitivity. Despite these shifts, India’s office market remains resilient, and the continued strength of the premium residential segment affirms the sector’s underlying robustness. As macroeconomic indicators adjust, real estate is displaying its capacity to adapt with stability and long-term potential.”
Residential market outlook
The residential sentiment in Q1 2025 reflected a clear shift toward stability and cautious optimism. While overall enthusiasm has moderated compared to the highs of 2023 and early 2024, the market continues to show resilience, particularly in higher ticket size segments. Only 22% of stakeholders expect residential sales to increase, marking a notable decline from 73% in the same period in last year. This softening is driven by moderation in demand within the mid and lower ticket-size segments, where affordability concerns and truncated supply led to demand deceleration.
Launch activity has also moderated, with 28% of stakeholders anticipating an increase and 39% expecting stability. Price sentiment remains largely positive, with 93% of stakeholders expect prices to either rise or stay stable. The share of those anticipating a price increase stands at 50%, compared to 82% in Q1 2024, suggesting a shift away from aggressive price growth toward a more measured and sustainable pricing environment, the report said.
Residential sentiment remains resilient
| Q4 2024 | Residential Sales | Residential Launches | Residential Prices |
| Increase | 22% | 28% | 50% |
| Same | 28% | 39% | 43% |
| Decrease | 50% | 33% | 7% |
Source: Knight Frank Research
Hari Babu, President-NAREDCO, said, “While the Knight Frank Q1 2025 Sentiment Index shows a marginal decline in both current and future sentiment scores compared to Q4, this slight dip amidst global uncertainties reflects the strength and adaptability of India’s real estate sector. The industry continues to move forward with optimism and long-term conviction.
The Indian real estate sector is showcasing robust performance in the commercial segment, driven by the demand from Global Capability Centres (GCCs) and tech-enabled enterprises — reaffirming India’s growing stature as a global business hub. On the residential front, developers are adopting a more mature, demand-led approach by focusing on high-ticket projects while rebalancing supply in the mid and affordable segments.
This is a sign of steady evolution. We see this as a phase of mindful progress, where Indian real estate is not just expanding, but doing so with greater purpose and prudence. Government-led infrastructure development and the expansion of real estate in Tier 2 and 3 cities will continue to support the sector. Additionally, the recent repo rate cut by the RBI has boosted liquidity and improved buyer sentiment, giving further momentum to the industry. We remain confident in the sector’s potential and its pivotal role in India’s economic journey.”
Office market outlook
The report highlighted that the office sector continued to display strength in Q1 2025, backed by robust occupier demand and rental resilience. It stated that 82% of stakeholders expect leasing activity to either increase or remain stable, driven by sustained expansion from Global Capability Centres, third party IT services firms, and flex space operators. While only 24% foresee an increase in new office supply, 41% anticipate stability, reflecting developers’ calibrated approach amid high office space absorption. Rents remain on a firm footing, with 91% of respondents expecting them to stay stable or rise.
Economic scenario
In Q1 2025, 55% of stakeholders expect economic momentum to either improve or remain stable, down from 91% in the same period in last year. The moderation reflects concerns over global trade volatility, and recent cross-border developments. However, the Reserve Bank of India’s consecutive repo rate cuts in February and April are expected to support consumption and investment, providing a foundation for economic recovery in the months ahead.
Funding sentiment remains steady, with 79% of stakeholders expecting availability to either improve or remain unchanged. While 35% foresee improved access, slightly lower than the previous quarter, the recent rate cuts have enhanced liquidity and reduced borrowing costs.
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