South India Leads Real Estate Recovery in Q2 2025

India's real estate market recorded a "cautious recovery" during the second quarter of 2025, led by the Rs.1 crore plus housing segment and strong sentiment in South India, the Knight Frank-NAREDCO Real Estate Sentiment Index reports.

The Current Sentiment Score increased to 56 during April–June from 54 in the last quarter, and the Future Sentiment Score increased from 56 to 61, a sign of growing optimism. A reading above 50 is a sign of positive sentiment.

"Developers are linking new launches with changing lifestyle requirements and city growth, particularly in high-demand micro-markets. The Rs.1 crore-and-above category keeps outshining, boosted by healthy demand and customized launches, while mid- and low-income segments grapple with affordability issues and decreasing developer margins." the report stated. 

Key Highlights:

• South India leads sentiment recovery with a Future Sentiment Score of 63, driven by strong activity in Bengaluru, Hyderabad, and Chennai
• High-end housing segment (more than Rs.1 Crore) outperforms, fueled by demand for lifestyle-driven, premium inventory
• Developer confidence surges, as RBI’s 100 bps repo rate cut improves financing and boosts launch plans

South India was the regional leader with a Future Sentiment Score of 63. Urban markets such as Bengaluru, Hyderabad, and Chennai were major drivers, boosted by high office absorption and vibrant residential activity. "South India continues to be a growth-inducing vehicle for the sector," the report said.

A major sentiment shift was observed among developers, whose Future Sentiment Score jumped from 53 in Q1 to 63 in Q2 2025. "The 100-basis point repo rate cut by the RBI and improving financing access have lifted developer confidence," the report stated.

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Non-developer stakeholders, including NBFCs and private equity players, also posted a positive outlook, with their sentiment rising from 57 to 60.

On prices, 94 percent of the respondents anticipate steady or increasing residential rates. Bengaluru, NCR, and Chennai noted double-digit year-over-year growth because of scarce supply coupled with a preference for branded, amenity-sport homes.

Jamshid Kazi, Country Head, Knight Frank India, stated: "The increasing convergence between developers and financial institutions is an encouraging indication for sustained sectoral momentum in H2 2025."