Real estate developers and financial institutions are adopting a cautious approach towards the property sector outlook at least until September amid global uncertainties and rising inflationary pressures, according to a Knight Frank-Naredco survey.
Real estate consultant Knight Frank and realtors' body NAREDCO released the 'Real Estate Sentiment Index Q1 2026' on Wednesday, which showed a sharp moderation in stakeholder sentiment during January-March 2026.
The current sentiment score fell to 49 from 60 in the previous quarter, slipping into pessimistic territory for the first time in recent years.
Future Sentiment Score Neutral
The Future Sentiment Score stands at a neutral 50 points, also recording a decline from 61 points in Q4 2025. The report said the sector has entered a phase of cautious recalibration.
The sentiment index is based on responses from developers, investors and financial institutions. A score above 50 indicates optimism, 50 indicates neutral sentiment and below 50 signals pessimism.
Knight Frank and Naredco said the moderation was largely driven by global macroeconomic volatility and elevated crude oil prices, which have increased construction and logistics costs.
Elevated crude oil prices have intensified inflationary trends, impacting construction and logistics costs, affecting project viability. At the same time, tighter financial conditions have led stakeholders to adopt a cautious stance, the report said.
Short-Term Caution, Not Structural Weakness
Naredco President Praveen Jain said, Real estate sentiment has moderated amid global macroeconomic headwinds and inflationary pressures; however, this reflects short-term caution among stakeholders rather than any weakening in the residential market's underlying strength.
He said the residential segment is expected to regain momentum once global uncertainties ease.
Shishir Baijal, International Partner, Chairman and Managing Director of Knight Frank India, said the moderation reflects the impact of energy market disruptions and geopolitical tensions.
While India's economic fundamentals remain robust, the real estate sector is entering a phase of cautious recalibration, Baijal said.
He added that the housing market is seeing a natural moderation after a strong growth cycle, while office demand remains resilient.
In the near term, stakeholders are likely to remain in a wait-and-watch mode as they assess the evolving macroeconomic environment, he said.
