Summary of this article
Premium housing demand boosts Q3 2025 real estate sentiment.
Office leasing remains the strongest driver of market optimism.
Stakeholders expect stable, sustained growth heading into 2026.
The Indian real estate sector entered the third quarter of 2025 on a more solid ground, which was anchored by the resilient macroeconomic fundamentals and improving confidence in residential and commercial markets, according to the latest Knight Frank-NARDECO Real Estate Sentiment Index for Q3 2025 report. The report says the market is stabilising after a period of rough waves.
The prevailing Sentiment Score has climbed up from 56 to 59 in this quarter, the report says, this indicates an improvement in the total outlook among developers, financial institutions, and other stakeholders. Though the Future Sentiment Score is steady at 61 this quarter as well, this reflects a sustained optimism for the next two quarters. These two indicators act as a reinforcement for a sector that is confident in its growth.
The economic steadiness is clearly an influencing factor that weighs in on this result. According to the report, 78 per cent of respondents expect an overall economic momentum that these digits might remain stable or improve.
Improved Confidence In Residential Market
Residential activity continues to show a positive attitude, although sentiments remain uneven, the strong demand persists at the premium end of the residential market. This is supported by rising incomes and growing consumer confidence. In contrast, the developers remain cautious with lower and mid-segment project launches since the demand recovery is very slow there, the report says.
As many as 71 per cent of respondents expect launches to either increase or remain steady, this is a 1 per cent rise from the previous quarter. This signals a calculated approach from the stakeholders, specifically developers of projects. Consumers are more indulgent when it comes to luxury residential investments and developers are prioritising these high-value projects to pace up the supply.
Sandeep Agarwal, executive director, finance & group CFO, Elan Group, emphasises a structural shift in the expectations of homebuyers.
He said: “India’s residential segment continues to be shaped by strong fundamentals, but the defining shift of this cycle is the homebuyer’s clear preference for elevated, experience-driven living. In Gurugram, corridors such as the Dwarka Expressway, Southern Peripheral Road and Sohna Road have evolved into some of the region’s most sought-after residential destinations. Their growth reflects a broader lifestyle transition, buyers today are drawn to neighbourhoods that offer superior connectivity, modern social infrastructure, and communities designed around space, wellness, and contemporary amenities.”
According to the report, the residential market segment is not going to back down in the coming months due to consumer demands of a more luxury segment.
Commercial Market in 2025
The report says that the office market is way ahead; with leasing, supply, and rents all showing optimism.
Leasing sentiment has strengthened due to constant expansion, continued IT-led demand and workspace operators. A large share of stakeholders expect leasing activity to remain steady or grow in the next six months.
The report said that developers are taking on a more cautious approach, and the developer confidence has dipped to 59 from 63, indicating caution as they navigate more construction costs and slower rise in the mass-market residential sector. This is a subtle yet very important shift in the minds of developers.
Agarwal added: “For developers who are committed to quality craftsmanship, future-ready design, and creating environments that enrich everyday living, this phase presents a positive and encouraging outlook. The focus is shifting firmly toward projects that offer a refined lifestyle experience, and that is exactly where the next wave of value creation lies.”
The report concludes that while the market remains optimistic, developers are finding a foothold between opportunity and risk management. As 2026 approaches, the Indian real estate sector appears to be well-positioned for balanced and sustainable growth with strategically aligned stakeholders, the report further said.
