The real estate sector that was facing a crisis since long due to lockdown may get relief in the festive season. In terms of supply of new residential units, around 50% of real estate stakeholders are expecting that the ongoing situation in the realty sector will either improve or remain the same for about the next six months. However, with respect to sales, 31% of stakeholders see an improvement in residential property sales. So, there are mixed reactions related to movements in the prices in the real estate sector. Almost half of the stakeholder’s group are saying that the property prices will weaken and others expressing that they would remain around current situations or increase.
All these respondents’ data is based on the findings from the 25th Knight Frank – FICCI -NAREDCO Real Estate Sentiment Index Q2 2020 survey. This survey was conducted in the first two weeks of July which covered the period of April to June 2020. With respect to office leasing, 27% of stakeholders expect an improvement in the coming six months. On the other hand, 73% foresee that the situation will remain the same or worsen.
With the consistent economic downturn and uncertainty with regards to recuperation, the ongoing sentiments of the realty sector stakeholders in India have been recorded at a low 22 in Q2 2020 during the period of April to June. In any case, the realty partners have demonstrated moderate improvement in future sentiments for the following six months, but they remain in the pessimism zone, according to the survey findings.
New Business Models Shaping Recovery of Real Estate Sector
The Knight Frank Q2 2020 survey also indicated that the ‘future sentiment score’ of realty partners, however still in the critical scoring zone, has seen an improvement at 41 in Q2 2020 against the score of 36 in Q1 2020. This is referred to as a foresee improvement in macroeconomic indicators and due to the adoption of a new business model in the real estate sector for boosting the recovery process in the next six months.
The survey covers key supply-side partners, which incorporates banks and non-banking financial companies (NBFCs), private equity funds, developers, private value assets, banks, and non-banking money related organizations (NBFCs). A score of 50 indicates a status or neutral quo. A score over 50 exhibits a ‘positive’ sentiment and score under 50 shows a ‘negative’ sentiment.
The festive season will help in reviving the economical situation of the realty sector!
With the upcoming festive season, 2020 along with some macroeconomic indicators demonstrating marginal improvement, the real estate stakeholders have indicated improved sentiment contrasted with the last quarter yet they have consistently been in the skeptical zone.
At this point, we anticipate that the lockdown should ease by the approach of the festive season, assisting with a revival in financial activities and improve the conversion of pent-up demand,” said Chairman and Managing Director, Knight Frank India, Shishir Baijal.
There is much need for additional demand for boosting measures to enhance sentiments in the economy. There is a need for measures particularly in the real estate sector as well for affordable housing, additional tax benefits for buying/renting a house, facilitating of loan available in the realty sector for developers to recover from the pandemic crisis, he added.
Future sentiment score
The future sentiment score crept up to 41 in Q2 2020, showing a potential recovery for the realty sector. The improvement in macroeconomics and stakeholders embracing a new business model has made an expectation for recuperation in the next six months.
Written by: Neha Rampal