Housing market sentiments turn pessimistic in April-June: report
Sentiments in the real estate market turned pessimistic in the April-June quarter due to the outbreak of the second wave of the COVID-19 pandemic, but the outlook for the next six months remains optimistic, according to a survey of Knight Frank, FICCI and Naredco.
In the 29th edition of the Real Estate Sentiment Index Q2 2021, the consultant said the current sentiment score fell to 35 in April-June 2021 from 57 in the first quarter of this calendar year.
However, he said the decline is less intense than it was during the first COVID wave (Q2 2020) when the score hit an all-time low of 22.
The future sentiment score fell slightly to 56 in the second quarter of 2021 from 57 in the first quarter of 2021, but continues to remain in the optimistic zone.
A score above 50 indicates ‘optimism’ in sentiment, a score of 50 means the sentiment is ‘same’ or ‘neutral’, while a score below 50 indicates ‘pessimism’. The survey is aimed at supply-side stakeholders, including property developers, banks and other financial institutions.
Knight Frank India Chairman and Managing Director Shishir Baijal said: “The tragedy of the second wave of the pandemic has dragged down overall industry sentiment in the second quarter of 2021.
Vaccine availability, a robust vaccination program, as well as continued economic activities were the main reason for the optimistic future sentiment score, compared to last year, he added.
“The real estate sector is moving forward with caution and recognizes that there is latent demand for the office and residential sectors, albeit hampered by the prolonged pandemic,” Baijal said.
Getamber Anand, co-chairman of FICCI’s real estate committee and president and chief executive of ATS Infrastructure, said the outlook for the sector is positive despite the debilitating impact of a pandemic.
Niranjan Hiranandani, National Chairman, NAREDCO and Hiranandani Group Managing Director, said: “The current Sentiment Index score in the second quarter of 2021 reflects the impact of piecemeal restrictions in April and May, followed by the easing of restrictions in June 2021.”
The calibrated reopening of economic activities with an accelerated inoculation campaign led to an upward trajectory of purchase demand and home sales in June thanks to the stability and security it offers during the deep crisis, a- he added.
Stakeholders’ outlook for the office market has improved in Q2 2021, especially with regard to rental activity.
In Q2 2021, 40% of respondents believed office leasing activity would increase over the next six months, up from 34% in the previous quarter. Around 21% of respondents to the Q2 2021 survey, compared to 15% in Q1 2021, expect office rents to increase over the next six months, while 40% expect rents remain stable.
“Optimism in the outlook for the residential market continued into the second quarter of 2021. More than 50% of respondents to the second quarter of 2021 survey continue to expect an increase in residential launches and sales over the past next six months,” Knight Frank said.
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