real estate future sentiment: Real estate business future sentiment moves up to optimistic zone

The continued resilience of the Indian economy and of the real estate industry has influenced an upward movement in the future sentiment of the real estate business environment.

The future sentiment score captured through Knight Frank-NAREDCO Real Estate Sentiment Index has moved up to 58 during the fourth quarter from 57 in the previous quarter.

The current sentiment score has moderated to 59 in December quarter from 61 in September quarter mainly on account of global economic uncertainty and geopolitical risk owing to the prolonged Russia-Ukraine war.

The developer future sentiment score that represents the market expectations for the upcoming six months (till March 2023), has scaled up to 62 in December quarter from 53 in the previous quarter. Despite increasing mortgage rates owing to the 225-basis point hike in repo rates, the sustained momentum in residential sales has boosted developer sentiment for the next six months.

“The strength of domestic demand with a relatively better inflationary position and nuanced monetary policy actions placed India as one of the leading performers in an uncertain global environment plagued by early recessionary trends. This reflects in large part on the performance of the real estate market in the country as demonstrated by robust office and residential sales in 2022,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.

According to him, while the global geopolitical and economic conditions are likely to remain volatile, the domestic economic conditions may see some stability as inflationary pressures are expected to ease by mid of the year. This should reflect well on demand and help the residential market remain largely buoyant. The long-term outlook for India remains strong with a positive outlook for future real estate activities.

“The strong fundamentals of the Indian economy along with the robust recovery in both demand and inventory supplies in the housing sector have set the momentum for the year ahead and this optimism is here to stay. Although global headwinds are there, India has navigated the scenario well so far, and it will be able to limit the impact of recessionary pressures going forward as well,” said Rajan Bandelkar, President, NAREDCO. While the underlying demand for residential asset classes lend confidence to the developers’ sentiment, non-developers express watchfulness for the next six months while remaining in large part future positive.

Future sentiment score among non-developers stakeholders including banks, financial institutions, private equity funds decreased to 55 during the quarter from 60 in the previous quarter while remaining in the optimistic zone.

The looming threat of a recession and high-interest rate regime in major advanced economies can impact the investment climate and make fundraising for Indian businesses challenging.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top