FICCI-NAREDCO-Knight Frank India has unveiled the latest findings of the Real Estate Sentiment Index for Q3 2017 (June–September 2017).
Shishir Baijal, Chairman and Managing Director, Knight Frank India “Business sentiments in the recent history of real estate in India have hit the lowest levels of optimism. While sentiments are largely transient in nature, the prevalent mood in the industry reflects that it has finally come to terms with the short-term adverse impacts of the structural reforms that became a reality over the past 12-odd months.
Going forward I feel that the next 12 to 18 months are likely to be the ‘under observation’ period for the real estate sector. Industry stakeholders should spend the period in reorienting businesses in line with the new order.”
Dr. Samantak Das – Chief Economist & National Director – Research, Knight Frank India shares an overview on India’s Real Estate Sentiment (Residential and Commercial) for Q3 2017:“Although unprecedented reforms were initiated with great intentions, the sentiments of the supply side stakeholders in real estate are at an all-time low in the current government regime. Reforms of high magnitude were bunched together to propel the industry into an era of transparency and efficiency in the last year.
The residential sector which decides the trajectory of the real estate industry in the country is likely to be under continued pressure for the next six months. The office market is relatively better off with majority of the stakeholders opining either a steady or improving leasing environment.”
The future sentiment score in Q3 2017 (55) has reached its lowest point over the past 39 months, indicating a significant decline in optimism pertaining to the sector’s future performance. This indicates that the true impact of demonetisation and structural reforms such as RERA and GST have finally sunk into the industry.
The score was also drastically lower than the future sentiment score of 61 in the demonetisation-hit quarter of Q4 2016 when the industry was bullish about the future of the sector.
While the future score has not yet entered the pessimistic zone no revival is expected over the next six months.
Hovering in the pessimistic zone the current sentiment score (46) in Q3 2017 also fell for two back-to-back quarters.
NATIONAL CAPITAL REGION FALLS FLAT, WEST SLIPS FURTHER, OTHER REGIONS HOLD ON
Hit by prolonged crisis in the National Capital Region (NCR), one of the largest real estate contributors in the northern zone, the north region recorded the lowest future sentiment score of 41.
The future sentiment score in the western zone (53) has been on a constant decline and lowest over the past 39 months in Q3 2017.
REAL ESTATE INDUSTRY STARTS TO LOSE HOPE ON THE ECONOMIC FRONT
Only 51% of the stakeholders have opined that the economy will be better in the coming six months as against 62% in Q2 2017.
Only 49% of the stakeholders have opined that the funding scenario will be better in the next six months as opposed to 67% in Q2 2017.
RESIDENTIAL SECTOR IN THE ROUGH
Majority of the stakeholders feel that the residential launches and sales are either likely to worsen in the next six months or hold steady to their current level, which itself is abysmally low.
73% of the respondents have opined that the residential price appreciation will either worsen or remain the same in the coming six months.
OFFICE MARKET HOLDS STEADY
The office market is showing a much better future trend than the residential sector in Q3 2017. Majority of the stakeholders foresee the office market to either improve or maintain the present levels over the next six months.
Nearly 82% of the respondents opine that office rental will either remain the same or would move up in the coming six months.