Sentiment Index Score for real estate touched a record 65 for the fourth quarter of 2021, topping the previous high of 63 in the third quarter, noted a report called Knight Frank-FICCI-NAREDCO Real Estate Sentiment Index.
A score above 50 indicates optimism, 50 means the sentiment is neutral, while a score below 50 indicates pessimism. The quarterly report is in its 31st edition.
This improvement in the score is on account of reduced uncertainty on the economic front leading to stability in demand in the real estate sector.
The Future Sentiment score, that gauges stakeholders’ expectations in the short to medium term, also remains in the optimistic zone, albeit it dipped from 72 in Q3 to 60 in Q4 2021, reflecting prudent optimism due to Omicron.
With respect to the economic outlook, 75% of respondents in Q4 2021 expect the overall economic momentum to remain stable over the next six months, while in terms of credit availability, 60% expect the credit situation to maintain status-quo over the next six months, and 37% expect it to increase.
Compared to Q3, the south and east zones’ Future Sentiment score has inched up in Q4. The Future Sentiment score for south increased to 64 in Q4 from 62 in Q3 as key southern markets recorded good traction in both office and residential sectors. For the east the score rose from 57 in Q3 to 58 in Q4.
The north and west zones clocked scores of 57 and 56 respectively in Q4 as stakeholders remained cautiously optimistic for the near term on Omicron concerns.
For the residential market, 72% of the respondents saw sales remaining stable over the next six months, while 75% feared new supply may decrease. An overwhelming majority of 62% expect a decline in residential prices due to Omicron.
For the office market, 61% of respondents opined that leasing will remain stable over the next six months. Stakeholder outlook for office rents improved in Q4. Compared to Q3 - when 27% respondents felt office rents may increase in next six months – this time 47% opined the same. In terms of new office supply, 88% of the respondents are of the opinion that new office supply will either remain stable or will witness an increase over the next six months.
“While good demand conditions prevail for the real estate sector, stakeholders are adopting a cautious approach. Thus far the economic, social and human cost of the pandemic has been very high. Therefore, the entire country is currently awaiting to see the complete extent of the ongoing wave. Having said that, businesses and consumers have adapted better to these disruptions, which reflects in India’s 9.2% growth estimate for Gross Domestic Product (GDP) in 2021-22,” said Shishir Baijal, chairman and managing director, Knight Frank India.
“Future Sentiment score has declined from 72 in Q3 to 60 in Q4. However, it still remains in the optimistic zone and is temporary and will inch back up soon,” said Rajan Bandelkar, president, NAREDCO India, and director, Raunak Group.
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