India’s real estate sector shows strong growth outlook: Report

Residential prices, office leasing, and rents expected to rise in the coming months

India’s real estate sector is poised for growth over the next six months, according to a new survey by Knight Frank and NAREDCO, released on Friday. The report indicates rising confidence in both the residential and office markets, driven by consistent demand and strong market fundamentals.

In the residential segment, 62% of respondents anticipate an increase in property prices, with demand particularly robust in the luxury market, which includes homes priced at Rs.10 million and above.

Additionally, 40% of respondents foresee higher sales, and 38% expect market stability in the coming months. This optimism reflects the sector’s continued resilience despite broader economic fluctuations.

The office market outlook remains strong, with significant confidence in key parameters such as leasing, supply, and rents. Most respondents (76%) expect office leasing activity to improve, driven by positive corporate sentiment and a sustained recovery in demand. Furthermore, 47% predict an increase in office supply, indicating a stable and expanding market.

Rental performance is expected to rise as 73% of respondents anticipate higher office rents due to increasing demand for quality commercial spaces.

The survey, which forms part of the Knight Frank-NAREDCO Real Estate Sentiment Index, gauges the perceptions of supply-side stakeholders and financial institutions regarding the real estate market, economic climate, and funding availability.

The index uses a score scale where 50 represents a neutral outlook, scores above 50 indicate positive sentiment, and scores below 50 reflect negative sentiment.

The Developer Future Sentiment Score rose from 61 in Q2 2024 to 65 in Q3 2024, indicating renewed optimism among developers. This shift reflects the industry’s ability to adapt to changing market conditions and leverage strong sales momentum.

In contrast, the Non-Developer Future Sentiment Score, which includes banks, financial institutions, and private equity funds, remained stable at 68, demonstrating confidence in well-structured projects and the long-term potential of the real estate sector.

Knight Frank India’s Chairman and Managing Director, Shishir Baijal, highlighted the strength of the sector, stating, “While the Current Sentiment Score moderated slightly, the Future Sentiment Score improved, reflecting growing confidence among stakeholders. Strong demand in high-end residential sales and stable leasing in commercial spaces underscore the sector’s steady performance.”

In addition, the survey found that 46% of respondents expect the economic scenario to improve, reflecting tempered optimism about India’s economic resilience and growth potential.

However, there was a slight dip in expectations regarding funding availability, with 47% anticipating an increase in funding, compared to 51% in the previous quarter.

Overall, the findings suggest that India’s real estate sector is on a stable and positive trajectory, with optimism across both residential and commercial segments, driven by strong demand and favorable market dynamics.

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