India's Real Estate Sector Shows Early Signs of Stabilization Amid Global Uncertainties

Mumbai: India’s real estate sector is showing early signs of stabilisation after a sharp deterioration in sentiment earlier this year, with stakeholders indicating that global uncertainties continue to weigh on the market but are no longer worsening at the same pace.

While the residential market is entering a phase of normalisation following multiple years of sustained growth, robust office leasing activity and resilient domestic economic fundamentals continue to underpin confidence in the sector’s long-term outlook, showed a Knight Frank-NAREDCO assessment.

The current sentiment score, assessed through response of over 120 industry stakeholders, for the quarter ended June slipped marginally to 48 from 49 in the previous quarter, remaining in the pessimistic zone. The future sentiment score, however, remained unchanged at 50, suggesting that the sharp deterioration witnessed in the previous quarter has levelled off as they expect prevailing challenges to persist over the next six months.

“The real estate sector continues to navigate a complex global environment characterised by geopolitical tensions, inflationary pressures and volatile energy markets. While these factors have weighed on current sentiment, the more significant takeaway from this quarter's findings is the sharp decline witnessed in the previous quarter has levelled off, with future sentiment holding steady at the neutral threshold,” said Shishir Baijal, International Partner, CMD, Knight Frank India.

The resilience of India’s domestic economy, sustained occupier demand in the office market and a gradual easing of pessimism across key real estate indicators indicate that stakeholder confidence is beginning to stabilise.

“Residential segment is settling into a more mature phase, a normalisation rather than a weakening, while office continues to anchor the market with resilient leasing and firm rents. The pressures at play are external in origin, and India's real estate fundamentals remain robust enough to absorb them,” said Parveen Jain, National President, NAREDCO.

The assessment showed the residential market is undergoing moderation after an extended growth cycle. Housing sales across the top markets rose 1% year-on-year in the first half of 2026. The share of stakeholders expecting residential demand to weaken over the next six months declined to 45% from 52% in the previous quarter, while those expecting conditions to remain unchanged increased.

Similarly, respondents anticipating weaker residential launches fell to 38% from 45% in the first quarter. At the same time, 74% of respondents expect residential prices to either remain stable or rise over the next six months.

Developer sentiment remained unchanged at 51, while non-developer stakeholders, including financial institutions, banks and private equity investors, saw sentiment improve to 53 in Q2 2026 from 50 in the previous quarter. Regionally, the North Zone recovered modestly to 52, supported by office market activity, while the West Zone remained at 50. The South and East Zones continued to stay cautious.

The office segment continued to outperform other asset classes. Office transactions reached 48 million sq ft in the first half of 2026, registering only a 2% year-on-year decline despite a high base. Stakeholder confidence also remained constructive, with 74% expecting leasing volumes to remain stable or improve, 76% expecting office completions to remain stable or improve, and 81% expecting office rents to remain stable or increase over the coming six months.