As the Indian economy navigated the third wave whilst being faced with the uncertainty of war in Europe, the real estate sector momentum remained unabated, both for the residential and commercial segments. The Current Sentiment score increased from 65 in Q4 2021 to 68 in Q1 2022 as the last six months remained positive for growth for most real estate stakeholders, the Knight Frank – NAREDCO Real Estate Sentiment Index Q1 2022 said on April 20.
The flagship survey conducted quarterly by Knight Frank India and National Real Estate Development Council (NAREDCO) noted that Current Sentiment soared to a new high of 68 – indicating that most stakeholders experienced positive developments in their businesses in the last six months including the period of the survey.
A score above 50 indicates optimism, 50 means the sentiment is neutral, while a score below 50 indicates pessimism.
The Future Sentiment score recorded at 75 was at a historical best. This score indicates the expectations of the developers and investors for the next six months from the time of the survey. The flagship survey is in its 32nd edition.
The Future Sentiment score, which gauges the stakeholders’ expectations for the next six months, also soared to 75 in Q1 2022 in view of a resolute economic outlook and continued demand for real estate space across asset classes. With the removal of all COVID-19 protocols by the Indian government, there is a further boost in sentiments.
When asked about their Economic Outlook for India, 85 percent of respondents in Q1 2022 expect the overall economic momentum to improve over the next six months. In terms of Credit Availability Outlook, 66 percent of the respondents expect the funding availability to increase over the next six months, while 29 percent expect it to remain the same during the period.
The South Zone remains the most optimistic market with the highest score across zones in the current quarter. The Future Sentiment Score for South has inched up from 64 in Q4 2021 to 66 in Q1 2022. Compared to Q4 2021, the Future Sentiment score for the North Zone has inched up substantially with an increase from 57 in Q4 2021 to 65 in Q1 2022 as key markets in the North Zone recorded good traction in both office and residential sectors.
The other zones – West and East – maintained their optimistic position with a score of 57 each. Despite a marginal fall in East, where the score altered from 58 in Q4 2021 to 57 in Q1 2022, both these regions remained in the optimistic territory, it said.
“The growth in the residential market has been impressive, elevating the sentiments of the entire sector. As most companies start calling their staff back to work, office space demand has also been growing steadily. The buoyancy in stakeholders’ take on the sector reflects positively in both the Current and Future Sentiment Scores.
"However, geo-political tensions impacting crude oil prices, are leading to a rise in inflation in the Indian market, which can impact demand from end-users. The scenario is further complicated with supply chain disruptions, rise in input cost and an impending interest rate hike, all of which need to be watched carefully in the near future,” said Shishir Baijal, chairman and Managing Director, Knight Frank India.
“As seen in the current survey, the sentiment score has increased during the first three months. However, the situation with respect to the supply chains of raw materials may prolong in the near term. Hence, the development strategy should focus on establishing uninterrupted supply chains and faster project deliveries. Such a strategy will help the sector in achieving growth. There is already a positive outlook for Indian real estate in the next six months as the country's evolving urban landscape will continue to fuel the housing and office space demand,” said Rajan Bandelkar, President, NAREDCO India and Director of Raunak Group.
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