The sentiments are now in the positive zone and how for the first time since the Covid-19 pandemic slowed down the growth of the real estate industry in early 2020, says the 27th Edition of Knight Frank-FICCI-NAREDCO Real Estate Sentiment Index Q4 2020 (Oct-Dec 2020) Survey.
The ‘Current Sentiment Score’ jumped an impressive 14 points over the previous quarter with an optimistic score of 54 points in Q4 2020. The ‘Future Sentiment Score’ also witnessed a surge of 13 points to reach 65 points in Q4 2020 from 52 points in Q3 2020.
The pick up in the demand for residential and office spaces is one of the reasons for the optimistic sentiments. The western region saw the highest jump with 66 points in Q4 2020 from 47 points in Q3 2020.
“As reflected in the 27th Knight Frank – FICCI – NAREDCO Real Estate Sentiment Index Q4 2020 Survey, it was a resurgence that was powering optimism in real estate. The survey mirrors recovery expectations of not just real estate, but the economy,” noted Dr. Niranjan Hiranandani, National President – NAREDCO and ASSOCHAM and Founder & MD, Hiranandani Group.
As the pandemic restrictions continue to ease down, the number of respondents who felt that the economy would grow in the coming six months has also grown to 82% as against the 57% respondents with the same view in Q3 2020. Likewise, the percentage of respondents who feel that the economic health will worsen in the next six months went down substantially to 7% from 31%. In terms of credit availability, 87% of respondents believed that the funding scenario would either improve or remain the same.
On the real estate front, 77% felt that residential sales would increase over the next six months, up from 66%. While 60% believed that office leasing activity would increase over the next six months, up from 47% in the previous quarter.
“Investments in real estate over the recent past reflect positive sentiments on the part of investors, domestic as also global, on the resurgence in the Indian economic growth story. This is a clear indicator of the bullish growth story of Indian Real Estate and reflects on the growth prospects of 270 allied industries as also job creation. Recently, we have seen this investment is in the office spaces segment, which reflects the confidence of investors in the Indian GDP’s positive growth potential. Stakeholder outlook for the office market has improved substantially in Q4 2020 as leasing activity gained momentum.”
“The residential market outlook has revived further in Q4 2020, across all parameters, reflecting the increased traction in this segment. The impact of renewed consumer demand for residential realty has resulted in high levels of registration data, these transactions have lifted market sentiment. This bull run will be sustainable, growing through 2021, in the backdrop of the anticipated positive Union Budget – scripting the real estate revolution in India,” added Dr. Niranjan Hiranandani.
Shishir Baijal, Chairman and Managing Director, Knight Frank India said, “Both the Current and Future Sentiment scores in Q4 2020 have seen a great surge in the latest survey backed by a revival in both residential and office market real estate that has been highly encouraging. The sector saw a lift in the market’s mood and increased stakeholder expectations of a stronger recovery in the next six months.”
“As we begin our journey into 2021 with a positive outlook, it is important to closely watch the performance of the key economic indicators in the coming months to check the sustainability of the growth seen in the last two quarters of 2020. Equally crucial is the development of the vaccine and its widespread availability for the masses, these two factors will largely determine the performance of the real estate sector in the coming months,” Baijal elaborated.