Sentiment in India’s real estate improved as the country’s stable economic performance instilled confidence among developers and investors, according to surveys for the April-June period.
The Current Sentiment Index Score surged to 63 in April-June from 57 in the previous quarter, according to the 37th edition of the Real Estate Sentiment Index prepared by Knight Frank India and the National Real Estate Development Council (NAREDCO). The score signifies the current outlook of stakeholders in comparison to their expectations in the preceding six months.
A score above 50 indicates optimism, 50 means sentiment is neutral, while a score below 50 indicates pessimism.
Amid turbulent global developments, India has positioned itself as one of the fastest-growing large economies, which significantly influenced sentiments in Q2 of 2023. As inflation accelerated in the developed markets, India demonstrated resilience and bounced back, instilling confidence in stakeholders regarding the stability of the domestic economic climate and real estate sector performance over the next six months, said Shishir Baijal, chairman of Knight Frank India.
Office leasing, supply
The Future Sentiment Score rose to 64 in the second quarter from 61 in Q1 of 2023 as India’s macroeconomic indicators remained firm. The Future Sentiment score indicates expectations of developers and investors for the next six months from the time of the survey.
In Q2, 55 percent of the respondents expected residential sales to increase, compared with 48 percent in the previous quarter. The pause in interest rate hikes by the Reserve Bank of India spurred sentiment about the sustainability of the demand momentum in the next six months as the residential sector stands on a firm footing, supported by policy measures and the rally in 2022.
Half of the respondents were of the view that office leasing will increase in the next six months. In the previous quarter, 50 percent held a similar view. Despite a threat of recession in some major developed markets, stakeholders remained upbeat about the India growth story and expect office leasing to grow on account of strong demand from India-facing businesses, flex/co-working space operators, and the rise of global capability centres in the country.
According to 47 percent of the respondents, office supply is expected to improve in the next six months. In the previous quarter, 43 percent held a similar opinion. The survey found that 45 percent expected office rents to increase compared with 38 percent in the previous quarter.
“The bounce-back of the Indian economy, coupled with inflation within the RBI’s tolerance band, has instilled confidence among stakeholders in the domestic economic climate and the real estate sector's performance for the next six months. While zonal scores surged in all zones except the south, where caution prevails, the overall scores for all regions remained firm in the optimistic zone,” said Rajan Bandelkar, president of NAREDCO.
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