The Knight Frank-NAREDCO Real Estate Sentiment Index reveals that India's real estate sector has entered a phase of cautious recalibration, with the Current Sentiment Score dropping to 49 in Q1 2026 from 60 in the previous quarter, indicating a shift into pessimistic territory. The Future Sentiment Score also declined to 50, reflecting a departure from the optimism seen in recent years. This moderation in sentiment is largely driven by global uncertainties, including elevated crude oil prices that have intensified inflationary pressures, impacting construction and logistics costs.

Despite the decline in demand expectations, with 52% of respondents predicting a decrease in housing sales, residential prices remain firm. Approximately 73% of stakeholders expect prices to either rise or stay stable, supported by rising input costs. Meanwhile, the office segment remains resilient, with leasing activity reaching a record high, driven by strong demand and limited supply in key markets.

Stakeholders are adopting a cautious stance, with many in a wait-and-watch mode as they assess the evolving macroeconomic environment. Notably, 41% of respondents expect leasing activity to improve, while 81% anticipate rents to rise or remain stable. Overall, the Q1 2026 index suggests a transition phase influenced by global factors, even as the underlying market fundamentals remain intact.