Future real estate sentiment remains optimistic: Study

Indian office market outlook improves, shows Knight Frank-Ficci-Naredco Real Estate Sentiment Index Q2 2021

Hyderabad: The future sentiments of real estate stakeholders remain optimistic in Q2 2021 despite the second Covid wave that struck during this period, according to the 29th edition of Knight Frank-Ficci-Naredco Real Estate Sentiment Index Q2 2021 (April – June 2021) Survey.

The Future Sentiment score has inched down marginally from 57 in Q1 2021 to 56 in Q2 2021 continuing to remain in the optimistic zone. The outlook of stakeholders reflects more resilience in Q2 2021 than in Q2 2020.

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Further, the stakeholders’ reaction to the second pandemic wave was not as severe as it was during the first wave as indicated by the relatively lesser drop in sentiment scores in Q2 2021. The Current Sentiment score has dropped from 57 in Q1 2021 to 35 in Q2 2021, but the drop is less intense than it was during the first COVID wave (Q2 2020) when the score had hit an all-time low of 22.

A score of above 50 indicates ‘optimism’ in sentiment, a score of 50 means the sentiment is ‘same’ or ‘neutral’, while a score below 50 indicates ‘pessimism’.

Office leasing

Stakeholder outlook on the office market saw an improvement in Q2 2021, especially with respect to leasing activity. In Q2 2021, 40 per cent of survey respondents were of the opinion that the office leasing activity would increase over the next six months, up from 34 per cent last quarter.

Around 21 per cent of the Q2 2021 survey respondents, up from 15 per cent in Q1 2021, expects office rents to increase in the next six months while 40 per cent expect rents to remain stable.

Residential outlook

The optimism in the residential market outlook has continued in Q2 2021. More than 50 per cent of the Q2 2021 survey respondents continue to expect an increase in residential launches and sales in the coming six months.

Macroeconomy

Over 80 per cent of the Q2 2021 survey respondents continue to have an optimistic outlook for the economy in the coming six months. While on the credit availability front, stakeholder outlook has improved in Q2 2021 with 46 per cent respondents – up from 41 per cent in Q1 2021 – expecting an increase in the coming six months.

Shishir Baijal, CMD, Knight Frank India said, “The tragedy of the second wave of pandemic has pushed the overall industry sentiments down in the second quarter of 2021. However, our learning from the first wave, as well as a less stringent lockdown in the second wave, have equipped us well to mitigate the severity of the economic ramification, showing some level of positive outlook among the stakeholders when compared to the dead low sentiment score of 22 during the same period last year.”

The sector is aggressively adopting digital technologies to streamline the supply chain, attract home buyers, and most importantly, ensure business continuity. Despite lockdowns, developers have completed some major commercial projects and have put them for possession and lease, Getamber Anand, co-chair, Ficci Real Estate Committee observed.

Dr Niranjan Hiranandani, national president, Naredco and MD, Hiranandani Group said, with pent up demand on festive tailwinds, fiscal impetus in form of stamp duty waiver, unchanged ready reckoner rates, and historic low home loan interest rate cumulatively resulted in demand impetus from domestic as well as NRI home buyers’ segment.

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