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Real Estate Industry Upbeat About Improving Prospects; Overall Sentiment Up

A survey by Knight Frank has revealed that the real estate sector sentiment is upbeat at 68 points as compared to Q4 2021 sentiment score of 65.

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Despite geopolitical tensions and higher inflation concerns, sentiments in the real estate sector have remained optimistic and have touched new highs on the Knight Frank – NAREDCO Real Estate Sentiment Index Q1 2022. The findings appear in a quarterly survey conducted by Knight Frank India and National Real Estate Development Council (NAREDCO).

The current sentiment index score touched a new high of 68, which means that most industry stakeholders experienced positive developments in their businesses in the last six months, including the survey period. Furthermore, the future sentiment score, which is based on the future sentiments for the next six months, was recorded at 75, a historical best. This means that industry stakeholders are also optimistic about faring better in the next six months.

Says Shishir Baijal, chairman and managing director, Knight Frank India: “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, the demand for office space 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 the 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,” he adds.

Current Sentiments

The current sentiment score is 68 in Q1 2022, as against 65 in Q4 2021. The survey revealed that as the Indian economy passed the third Covid-19 wave, it was subject to external geopolitical shock, namely the Russia-Ukraine War. That said, the residential real estate segment remained unabated despite these challenges. The commercial real estate sector also showed signs of growth as the pandemic was coming to an end. Overall, a positive sentiment has been prevailing in the real estate sector since the last two quarters, and this quarter’s sentiment index was one of the highest in the history of the survey. 

Future Sentiments

The future sentiment score was even higher, at 75, than the current score of 68. Industry stakeholders remained positive about a resolute economic outlook for the next six months, and are hopeful of continued demand for real estate across different asset classes. Their sentiments were further boosted as the Indian government lifted most of Covid-19 protocols in different states.

The survey asked about their economic outlook for the Indian economy. A whopping 85 per cent of the respondents said they felt the overall Indian economic momentum to improve over the next six months. In terms of credit availability, 66 per cent of the respondents expected funding availability to increase over the next six months, and 29 per cent of the respondents believed it to remain the same.

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