Markets Optimistic About Real Estate, Says Sentiment Survey

The real estate sector seems to be headed for a revival with sentiments in the market turning optimistic, according to the latest joint survey by Knight Frank, FICCI, and NAREDCO.

According to the Real Estate Sentiment Index Q4 2020 Survey, the 'Current Sentiment Score' entered the optimistic zone for the first time in 2020 at 54 points in the October-December quarter, a significant jump of 14 points over the previous quarter.  The 'Future Sentiment Score’ also witnessed a robust surge to 65 points from 52 points in Q3 2020. 

A score of above 50 indicates ‘Optimism’ in sentiments, a score of 50 means the sentiment is ‘Same’ or ‘Neutral’, while a score below 50 indicates ‘Pessimism’.  

Geographically, the western part of the country saw the sharpest jump in the Future Sentiment Index. This zone’s Future Sentiment jumped to 66 points in the quarter ending December from 47 points in the previous quarter.  

Concerning stakeholders, both developers and non-developers (which include banks, NBFCs, and PE funds) recorded an improvement in the Future Sentiment score, the survey report said.

On the macroeconomic front, 82 per cent of the survey respondents opined that the economy would grow further in the coming six months as opposed to the 57 per cent respondents with the same view in the previous quarter. Similarly, the share of survey respondents with the opinion that economic health will worsen in the next six months went down substantially to 7 per cent from 31 per cent. 

Further, 77 per cent of the respondents thought that residential sales would increase over the next six months, up from 66 per cent in the previous quarter.

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,” he added.

Dr. Niranjan Hiranandani, National President - NAREDCO and ASSOCHAM, said the survey mirrors recovery expectations of not just real estate, but the economy. "Investments in real estate over the recent past reflect positive sentiments on 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," he said.