The residential genuine estate segment has recorded robust recovery across cities post the onset of the pandemic. Driven by the heightened want for home ownership, residential sales have gained momentum across ticket-sizes more than the last year. Reflecting this positive efficiency, stakeholder outlook for the residential genuine estate segment has been recording a positive outlook considering the fact that the previous couple of quarters. This optimism was only slightly mellowed in Q2 2021 due to the second COVID wave exigencies, according to the 29th Edition of Knight Frank-FICCI-NAREDCO Real Estate Sentiment Index Q2 2021 (April – June 2021).
As per the survey, the future sentiments of genuine estate sector stakeholders remained optimistic in Q2 2021 in spite of the second wave of COVID-19 that struck throughout this period. Further, the stakeholders’ reaction to the second pandemic wave was not as serious as it was throughout the initial wave as indicated by the somewhat lesser drop in sentiment scores in Q2 2021.
The Current Sentiment score has dropped from 57 in Q1 2021 to 35 in Q2 2021, but the drop is significantly less intense than it was throughout the initial COVID wave (Q2 2020) when the score had hit an all-time low of 22. The Future Sentiment score has inched down marginally from 57 in Q1 2021 to 56 in Q2 2021, continuing to stay in the optimistic zone. Here as nicely, the outlook of stakeholders reflects more resilience in Q2 2021 than in Q2 2020.
Market sentiments had been severely hit by the second COVID wave which began in March 2021. While a nationwide lockdown was avoided this time, all states went via phases of partial to full lockdowns throughout March to June 2021. This impacted financial activity of each residential and workplace genuine estate segments as has been captured by the fall in the Current Sentiment score for this quarter.
In terms of geography, the West zone saw the sharpest recovery in the Future Sentiment Score. This zone’s Future Sentiment score jumped from 53 in Q1 2021 to 60 in Q2 2021. With the resumption of financial activity, future sentiments (for the next six months) of stakeholders have remained in the optimistic zone, across most regions.
Stakeholder outlook on workplace industry saw an improvement in Q2 2021 specially with respect to leasing activity. In Q2 2021, 40% of survey respondents had been of the opinion that workplace leasing activity would enhance more than the next six months, up from 34% last quarter. Around 21% of the Q2 2021 survey respondents, up from 15% in Q1 2021, expects workplace rents to enhance in the next six months whilst 40% count on rents to stay steady.
The optimism in residential industry outlook has continued in Q2 2021. More than 50% of the Q2 2021 survey respondents continue to count on an enhance in residential launches and sales in the coming six months.
On the macroeconomic front, more than 80% of the Q2 2021 survey respondents continue to have an optimistic outlook for the economy in the coming six months. While on the credit availability front, stakeholder outlook has enhanced in Q2 2021 with 46% respondents – up from 41% in Q1 2021 – expecting an enhance in the coming six months.
Commenting on the similar, Shishir Baijal, Chairman and Managing Director, Knight Frank India, stated, “The tragedy of the second wave of pandemic has pushed the overall industry sentiments down in the second quarter of 2021. However, our learning from the first wave, as well as a less stringent lockdown in the second wave, have equipped us well to mitigate the severity of the economic ramification, showing some level of positive outlook among the stakeholders when compared to the dead low sentiment score of 22 during the same period last year.”
“The availability of vaccines, a robust vaccination programme, along with continued economic activities have been the primary reason for the optimistic future sentiment score, as compared to last year. The real estate sector is treading cautiously and acknowledges that there is latent demand for both office and residential sectors, albeit hindered by the prolonged pandemic,” he added.