India‘s real estate market is shrugging off caution and is gaining confidence, not from one city, but from a pair of southern cities. Bengaluru and Hyderabad were the strongest growth drivers in Q3 of 2025, where strong demand for office leasing and high-end homes pushed the Knight Frank-NAREDCO Real Estate Sentiment Index into positive territory. The Current Sentiment Score increased to 59 from 56, and the Future Sentiment Score remained unchanged at 61, suggesting confidence among developers, financiers, and investors.
The change is occurring in both the volume and composition. Developers are deliberately reducing the number of mid- and low-priced launches and putting more emphasis on high-priced, high-end, and luxury development projects to support margins and attract interest from investors. In Q3, the NCR, Bengaluru, and Hyderabad markets demonstrated year-over-year price increases in residential prices in the 13%-19% range—clear evidence that upper-end residences are outperforming other price points. The preference for luxury is also reflected in the buyer; the share of transactions of premium homes (above ₹1 crore) continues to expand as buyers are choosing experience over square footage—smart homes, integrated amenities, and proximity to business districts.
The commercial office market is another key driving force. Corporate India—and, increasingly, global capability centres (GCCs)—has kept leasing pipelines robust in the office market. In H1 2025, Bengaluru and Hyderabad accounted for just under half of the tech-sector leasing volume between all Indian cities, with Bengaluru absorbing approximately 3 million sq ft of office space and Hyderabad approximately 2.3 million sq ft of office space under the tech sector. This steady demand for office space by corporations has resulted in office rents remaining stable, larger-format leases being finalised, and even more interest from developers to provide quality Grade-A campuses.
Macro tailwinds have been actively driving the market. Lower inflation, stable interest rate expectations, and healthier liquidity have certainly helped improve real estate affordability and underwriting assumptions, making it easier for buyers and lenders to act confidently. According to analysts, these macroeconomic factors—rather than one-off sentiment-related spikes—are providing long-term structural support for the market outlook until 2026—all while developers remain cautious about where and what to build in our new world.
Yet there is selectiveness in that optimism. Developer sentiment eased a bit, driven by higher input costs and weakness in demand at lower price points. Non-developer stakeholders—banks, private equity firms, and institutional investors—remained steadily more optimistic, reflecting a different risk appetite across the ecosystem. Practically, that means new launches are more likely to be planned and clustered around prime micro-markets and luxury inventory, while mid-segment supply is to be maintained to avoid oversupply.
Why this data is important beyond a spreadsheet: growth geography is changing the urban map of India. Cities like Bengaluru and Hyderabad are converting high-quality office absorption into residential demand corridors—neighborhoods near tech parks are becoming premium residential enclaves, and the inward flow of higher-salary jobs is reshaping local retail, transit, and lifestyle amenities. For investors, the lesson becomes more granular: bet on micro-market dynamics and workplace-residence linkages, not just a city name on a map.
In the future, the market seems to be on a path of consistent growth—not over-inflated growth. If policy stability and liquidity remain, premium residential and office leasing may continue at the present pace, while continued caution from developers should constrain excessive supply. The era of homebuyers and corporates needing or wanting properties with incremental experiences available to them is here, but for urban planners and policymakers, the challenge will be how to translate the growth to build inclusive, resilient neighbourhoods instead of exclusive isles.
To summarise: India’s real estate mood improved, with Bengaluru and Hyderabad leading the march—with a new playbook that emphasizes quality, location, and measured supply over pure scale.
