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The Indian real estate sector saw a jump in sentiment between April and June, a report released on Tuesday said. According to Knight Frank-NAREDCO Real Estate Sentiment Index Q2 2023, the current sentiment score during the quarter rose to 63 from 57 in the previous quarter, which ended on March 31.
It was, however, lower than 68 and 65 noted during January-March 2022 and October-December 2021 respectively.
The current sentiment index indicates the respondents' assessment of the present scenario compared to six months ago. A score of 50 represents a neutral view or status quo, a score above 50 demonstrates a positive sentiment and a score below 50 indicates a negative sentiment.
The future sentiment index, which represents the expectations for the next six months, also saw an uptick during the quarter to 64 from 61 in the previous quarter.
"Despite facing high inflation in developed markets, the Indian economy demonstrated resilience and bounced back, instilling confidence in stakeholders regarding the stability of the domestic economic climate and real estate sector performance over the next six months," said Shishir Baijal, chairman and managing director at Knight Frank India.
He added that the resilience of the Indian economy amid turbulent global developments and the inflation staying between the Reserve Bank of India's tolerance limit of 2-6 per cent led to the jump in both scores. In June, India's retail inflation stood at 4.81 per cent.
In all the zones, the sentiment was the highest in the East zone at 73. It was followed by 70 in the North and 64 in the West. All these zones saw a rise in the sentiment score from the previous quarter.
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The South zone saw some moderation with the sentiment score falling from 62 in the previous quarter to 55 between April and June.
Outlook of the residential market
In the residential market, the report said, the sentiment was optimistic on all fronts - sales, launches and pricing. "Compared to the past quarter, the percentage of stakeholders who expect residential sector growth has increased this time on all fronts," it said.
Owing to the rate hike pause by the Monetary Policy Committee (MPC), between April and June, 55 per cent of the respondents expected residential sales to increase in the next six months. This is higher than 48 per cent who said the same in the January-March quarter.
In terms of launches, 62 per cent of the stakeholders said that residential launches will improve in the next six months. It was 56 per cent in the previous quarter.
However, a majority of respondents also believe that the sector will continue to see price hikes. 64 per cent of them said they expect residential prices to increase in the next six months on the back of steady demand for residential property. In comparison, 61 per cent of the respondents held a similar view in the previous quarter.
Outlook of the office space market
The outlook for office real estate also remains upbeat.
"Despite the potential threat of recession in developed markets, stakeholders maintain an upbeat outlook due to strong demand from India-facing businesses, the flexibility offered, and the rise of global capability centres within the country. This resilience further reinforces the positive sentiment in office leasing," said Rajan Bandelkar, president of NAREDCO.
Half of the respondents said office leasing will increase in the next six months. In the previous quarter too, 50 per cent held a similar view.
47 per cent of survey respondents also said they expect office supply to improve in the next six months. In the previous quarter, the figure was 43 per cent.
However, the expectations of price hikes were a highlight here too. 45 per cent of the respondents expect office rents to increase, whereas, in the previous quarter, it was at 38 per cent.
