New Delhi, May 6 (IANS) Stakeholder sentiment in India’s real estate sector entered into a cautious phase in Q1 2026 over global macroeconomic volatility, a report said on Wednesday.

The report from Knight Frank and NAREDCO said its quarterly index Current Sentiment Score fell to 49 from 60 and the Future Sentiment Score eased to a neutral 50 from 61.

The index captures supply‑side and financial institution views on economic conditions and funding availability.

“The moderation in sentiment is largely driven by global macroeconomic volatility. Elevated crude oil prices have intensified inflationary trends, impacting construction and logistics costs, affecting project viability,” the report said.

Even as India’s economic fundamentals remain largely stable, geopolitical conditions are beginning to influence real estate demand and supply dynamics.

Residential activity showed signs of recalibration after a prolonged growth cycle as sales and new launches moderated in Q1 2026.

“Demand is expected to further soften in the near term, even as property prices remain firm or continue rising. This divergence between demand moderation and price resilience highlights the structural cost challenges currently shaping the market,” the report noted.

Around 52 per cent of respondents expect housing sales to drop, even as 73 per cent foresee prices rising or remaining stable due to rising materials costs, labour costs and loan costs.

The divergence between weakening demand sentiment and firm pricing expectations highlights that rising structural costs are driving the residential market, it added.

“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,” said Praveen Jain, National President, NAREDCO.

He called the recent softening in residential sentiment a natural recalibration following a sustained growth phase, with end-user demand and steady price appreciation continuing to support resilience.

The report noted that nearly half of stakeholders expect fewer new project launches in the near term.

By contrast, the outlook on office segment remained strong, with 41 per cent of respondents expecting improvement in leasing demand.

A similar trend is observed in the office supply outlook with nearly half of the stakeholders expecting more completions, and others expecting stable or lower supply.

—IANS

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