Developer, investor sentiment in realty sector moderated in Apr-Jun: Report

The sentiment of developers, as well as non-developers like private equity (PE) players and non-banking financial companies (NBFCs) in the Indian real estate sector, moderated in the April-June quarter compared to the previous quarter, a report released on Wednesday showed.

While the overall sentiment remains optimistic, it has fallen considerably from the all-time high levels in the January-March quarter this year.

According to the "Knight Frank-NAREDCO Real Estate Sentiment Index Q2 2024," the Current Sentiment Index Score moderated to 65 from 72 in the previous quarter. This score signifies stakeholders' current outlook compared to six months ago.

The report said that this fall in the reading reflects a "careful assessment" as stakeholders navigate complex global economic scenarios while maintaining an optimistic approach towards Indian market fundamentals.

The Future Sentiment Index score, which represents expectations for the next six months, moderated more steeply to 65 from 73 in the previous quarter.

This, the report said, may be due to "caution around potential macroeconomic developments, including fiscal policies and geopolitical events, that could influence market confidence."

The report is based on a survey comprising questions about overall economic momentum, funding availability, project launches, sales volume, leasing volume, prices, and rents. A score of 50 represents a neutral view or status quo; a score above 50 demonstrates positive sentiment, and a score below 50 indicates negative sentiment.

The findings also highlighted the sentiments of developers and non-developers separately. While the non-developer sentiment score fell to 68 from 73 in the previous quarter, developers' sentiment seems to have been impacted more.

It was 61 in the quarter, down from 72 in the previous quarter.

The report said that developers have witnessed strong sales in 2023, but an extended period of high sales has led to concerns around consolidation.

"Developers remain cautious yet optimistic, having experienced strong sales since the beginning of 2023," the report said.

"While the market initially seemed poised for sustained growth with significant tailwinds, the extended uptrend cycle has led to a more guarded stance, as concerns about potential market consolidation have begun to surface," it added.

Moreover, it also showed that a majority of Indians expect home prices to go up further in the next six months.

As many as 63 per cent of those surveyed said they expect a rise in prices, and 36 per cent anticipate stable prices. The remaining respondents predicted a decline.

"With positive sentiment driven by sustained growth in residential and office markets, this adjustment highlights the sector's careful and measured approach, ensuring continued stability amidst ongoing economic and political developments," said Shishir Baijal, chairman and managing director, Knight Frank India.