The Knight Frank-Naredco Real Estate Sentiment Index for Q2 2026 remained neutral at 50, indicating that stakeholders expect prevailing challenges to persist over the next six months. According to the report, the future sentiment score also held steady at the same level as in Q1 2026, while the current sentiment score softened marginally to 48 from 49 in the previous quarter. This represents a significant improvement from the sharp correction witnessed in Q1 2026, when sentiment declined to 49 from 60 in Q4 2025. As per Shishir Baijal, International Partner, Chairman and Managing Director at Knight Frank India, the more significant takeaway is that the sharp decline witnessed in the previous quarter has levelled off, with future sentiment holding steady at the neutral threshold. The 49th edition of the index for Q2 2026 showed the Current Sentiment Score easing marginally to 48 from 49 in the previous quarter, remaining below the neutral mark of 50.
India's office market continued to underpin the real estate sector in the April-June quarter of 2026, helping keep future industry sentiment stable despite persistent global uncertainties and a moderation in the residential segment. Office transactions totalled 48 million sq ft during the first half of 2026, registering a marginal 2% year-on-year decline despite a high base year. The report noted that demand continued to be driven by Global Capability Centres (GCCs), technology firms and diversified corporate occupiers. 74% of industry stakeholders expect leasing volumes to either remain stable or improve over the next six months, while 81% expect office rents to remain stable or increase amid limited quality supply in key micro-markets. Stakeholder confidence in the commercial office market remained firm, with around 76% expecting office completions to remain stable or increase, supported by elevated construction, transportation and labour costs.
Across regions, sentiment hovered near the neutral mark with the North Zone recording the strongest improvement, with its sentiment score rising to 52, supported by robust office market activity, while the West Zone remained stable at 50. The South and East Zones maintained a cautious outlook as stakeholders monitored evolving economic and geopolitical conditions. According to Parveen Jain, National President at NAREDCO, external economic pressures are being absorbed by strong domestic fundamentals, with the current score slipping a point to 48 reflecting a global environment that remains fast-evolving and difficult to read. However, the future score holds firm at the neutral threshold of 50, signaling that stakeholders see the challenges persisting rather than deepening.
The latest data reveals a significant improvement in stakeholder confidence across key market indicators, with the share of respondents expecting economic conditions to deteriorate over the next six months falling sharply to 36%, down from 50% in Q1 2026. Meanwhile, 31% expect economic conditions to improve, reflecting easing concerns over global growth and geopolitical risks. Developer sentiment remained unchanged at 51, marginally above the neutral threshold, reflecting a cautious outlook as post-pandemic optimism continues to moderate. In contrast, sentiment among non-developer stakeholders—including banks, financial institutions, and private equity investors—improved, with the score rising to 53 from 50 in the previous quarter. This improvement suggests that capital providers have become more comfortable with prevailing market conditions after reacting sharply to global uncertainties in the first quarter.
The residential market continues to undergo a phase of moderation following multiple years of sustained growth, with housing sales across top markets rising marginally by 1% year-on-year in H1 2026. According to the report, the proportion of stakeholders expecting residential demand to weaken over the next six months declined to 45% from 52% in Q1 2026, while the share of respondents expecting market conditions to remain unchanged increased significantly. A significant 74% of respondents expect residential prices to either remain stable or rise over the coming six months. On the supply side, the share of stakeholders anticipating weaker residential launches declined to 38% from 45% in Q1 2026. As per Jain, residential is settling into a more mature phase, a normalisation rather than a weakening, while the pressures at play are external in origin and India's real estate fundamentals remain robust enough to absorb them.
The moderation in sentiment continues to be driven by external factors including geopolitical tensions, volatile energy prices and inflationary pressures that have clouded the global economic outlook. As reported by Knight Frank, the quarter-on-quarter decline in current sentiment reflects continued caution among stakeholders amid a challenging global environment. However, 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 suggest that stakeholder confidence is beginning to stabilize. The report also indicated an improvement in the broader economic outlook, with 19% of respondents anticipating improved capital availability despite tighter global financial conditions. According to Baijal, the real estate sector continues to navigate a complex global environment characterised by these factors, while India's strong domestic fundamentals, coupled with its position as the fastest-growing major economy, continue to provide confidence in the sector's long-term growth prospects.
