Real Estate Sentiment Score Reflects Balanced Outlook: Knight Frank-NAREDCO Real Estate Sentiment Index Q4 2024

New Delhi, March 3, 2025: The 43rd edition of the Knight Frank – NAREDCO Real Estate Sentiment Index Q4 2024 (October–December 2024) report reflects cautious optimism among real estate stakeholders. Both the Current and Future Sentiment Scores remain above the optimistic threshold of 50 but have corrected downward from the previous quarter, influenced by global economic shifts and stakeholder concerns regarding economic growth. The Current Sentiment Index Score declined to 59 in Q4 2024, down from 64 in Q3 2024, indicating a measured adjustment. Similarly, the Future Sentiment Score corrected to 59 in Q4 2024, compared to 67 in the previous quarter. Despite these corrections, both current and future sentiments remain firmly in the optimistic zone, underscoring continued confidence in the sector’s long-term prospects.

The residential market outlook in Q4 2024 sustains optimism with a 59 per cent response rate for an expected rise in residential prices, while 38 per cent of the stakeholders anticipate an increase in sales. A notable portion of 41 per cent anticipated rise in residential launches.

The office market outlook exhibits buoyancy on all key parameters – leasing, supply and rent – as the stakeholders remain confident about the performance of this asset class in the next six months.

The quarterly Knight Frank-NAREDCO report captures the current and future sentiments towards the real estate sector, as well as economic conditions and funding availability as perceived by the supply-side stakeholders and financial institutions. A score of 50 represents a neutral view or status quo; a score above 50 demonstrates a positive sentiment; and a score below 50 indicates a negative sentiment.

Residential Market Outlook

The future sentiment for the residential market remains in the optimistic territory though confidence in residential launches has moderated, with 32 per cent of respondents now expecting a decline in new launches in the first and second quarter of CY 2025, a significant denudation in sentiments from just 4 per cent in Q4 2023.

A comparable trend is seen in residential prices, while 88 per cent of respondents maintain that prices will increase or remain stable, the share of respondents anticipating a decline in prices is 12 per cent in Q4 2024, rising from 1 per cent in Q4 2023. This growing caution among stakeholders reflects a more measured outlook on the residential market. In the Q4 2024 future Sentiment survey, 38 per cent of the respondents expect residential sales to increase, and 23 per cent predicted stability. This demonstrates steady confidence in the market, with overall sentiment pointing towards moderation. In Q4 2024, 41 per cent of survey respondents opined that residential launches will improve, while 28 per cent indicated stability. 59 per cent of the survey respondents in Q4 2024 expect residential prices to increase, supported by consistent demand and limited inventory in prime markets.

Hari Babu, President-NAREDCO, said, “The Q4 2024 Sentiment Index report highlights a cautious optimism in the residential sector, with stakeholders adopting a more measured approach. While the decline in sentiment scores is notable, it’s essential to recognize that the scores remain firmly in the optimistic zone. The moderation in residential launches, sales, and prices is a reflection of the prevailing economic and market conditions. However, it’s heartening to note that the office market continues to demonstrate resilience, driven by strong leasing momentum and rental growth. I believe it’s crucial for developers and stakeholders to be adaptable and responsive to changing market conditions. We must focus on creating sustainable and affordable housing options that cater to the evolving needs of homebuyers. Despite the short-term challenges, I remain optimistic about the long-term prospects of the Indian real estate sector. With the government’s focus on infrastructure development and housing for all, I am confident that the sector will continue to grow and thrive in the years to come.”

Sentiments of Developers and Non-Developers

Developer Future Sentiment has adjusted downwards to 58 in Q4 2024 from 65 in Q3 2024. This shift reflects a cautious yet forward-looking perspective as developers respond to evolving market and economic indicators.

Non-developer stakeholders (including banks, financial institutions, and PE Funds) have revised their outlook slightly to 60 in Q4 2024. This cautious optimism reflects a balanced anticipation of challenges and opportunities in the upcoming months.

Shishir Baijal, Chairman and Managing Director, Knight Frank India, said, “Amid a cautiously optimistic global economic outlook for 2025, the real estate sector reflects a nuanced blend of resilience and tempered growth, where emerging opportunities coexist with evolving challenges. As we navigate these dynamic times, it is crucial to understand the shifts in sentiment, enabling stakeholders to make informed decisions for a prosperous future.”

Office Market Outlook

The office outlook strengthened further on all three parameters (leasing, new office supply and rent) as survey respondents remained confident about this sector’s long-term potential. Stakeholders opined that India’s office market demand will bolster in the first half of 2025.

In Q4 2024, 64 per cent of survey respondents expect office leasing to improve, driven by positive corporate sentiments and continued recovery in demand. 41 per cent of respondents predicted an increase in office supply, indicating stability in continued sector growth, while 64 per cent of the survey respondents expect office rents to increase, driven by growing demand of high-quality office spaces.

Economic Scenario

Based on the survey findings, 54 per cent of respondents have a positive outlook on the economic scenario. This marks a significant decline from Q4 2023 when 90 per cent of respondents expressed optimism about India’s economic growth. The tempered sentiment can be attributed to recent downward revisions in GDP projections, rupee depreciation, and other macroeconomic factors. Consequently, 46 per cent of respondents exhibit a moderated optimism regarding India’s economic resilience and growth potential.

Furthermore, 39 per cent anticipate an increase in funding availability, reflecting a more cautious confidence compared to 57 per cent in Q4 2023. Notably, the proportion of respondents expecting a decrease in funding has risen to 12 per cent in Q4 2024, up from 6 per cent in Q4 2023. This underscores the fact that while investors continue to recognize the sector’s long-term potential—as indicated by the non-developer overall future sentiment index score—stakeholders are likely to have a more cautious stance in the next 6 months.