The Current Sentiment score jumped significantly to 54 in Q4 2020 from 40 in Q3 2020, getting into the optimistic zone for the very first time in 2020, reveals the 27th Edition of Knight Frank-FICCI-NAREDCO Real Estate Sentiment Index Q4 2020 (October – December 2020) Survey. The score had turned damaging in Q1 2020 soon after the COVID-19 outbreak and had remained in the pessimistic zone throughout Q2 2020, as the influence of the stringent lockdowns became apparent on corporations. It revived in Q3 2020 on the back of enhancing financial wellness and pent-up demand.
The residential segment outlook was supported by pent-up demand, festive demand, multi-decadal low house loan interest prices, eye-catching residential costs and state government incentives such as reduction of stamp duty in Maharashtra. Residential sales reached pre-COVID levels (2019 quarterly typical) by Q4 2020.
The Future Sentiment score also climbed up to 65 in Q4 2020 from 52 in Q3 2020, mirroring the powerful recovery expectations prevalent in the industry. Stirring demand and festivities of Q4 2020 gave a powerful fillip not just to the true estate sector but also to the economy at significant. The improvement in higher-frequency indicators recorded considering that September 2020 continued in December 2020 as properly. Goods and Services Tax (GST) collections in December 2020 are at a record higher whereas the Purchasing Managers’ Index (PMI) for manufacturing recorded a fifth straight month of expansion.
Geographically, the western portion of the nation saw the sharpest jump in Future Sentiment Index. This zone’s Future Sentiment jumped to 66 points in Q4 2020 from 47 points in Q3 2020. With respect to stakeholders, each developers and non-developers (which incorporate banks, NBFCs and PE funds) recorded an improvement in Future Sentiment score in Q4 2020.
All round SENTIMENT SCORE
On the macroeconomic front, 82% of the survey respondents opined that the economy would develop additional in the coming six months as opposed to the 57% respondents with the identical view in Q3 2020. Similarly, the share of survey respondents with the opinion that financial wellness will worsen in the next six months went down substantially to 7% in Q4 2020 from 31% in Q3 2020. In terms of credit availability, 87% of the Q4 2020 survey respondents believed that the funding situation would either boost or continue to stay the identical more than the next six months.
Further, 77% of the Q4 2020 survey respondents have been of the opinion that residential sales would boost more than the next six months, up from 66% in Q3 2020. With regards to the workplace industry, 60% of the Q4 2020 survey respondents, up from 47% in Q3 2020, believed that workplace leasing activity would boost more than the next six months.
Commenting on the identical, Shishir Baijal, CMD, Knight Frank India, stated, “Both the Current and Future Sentiment scores in Q4 2020 have seen great surge in the latest survey backed by revival in both residential and office market real estate that have 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.”
Dr. Niranjan Hiranandani, National President – NAREDCO and ASSOCHAM, and Founder & MD, Hiranandani Group, stated, “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 the Indian real estate and reflects on the growth prospects of 270 allied industries as also job creation. Recently, we have seen this investment being in the office spaces segment, which reflects the confidence of investors in the Indian GDP’s positive growth potential. Stakeholder outlook for the office market has improved substantially in Q4 2020 as leasing activity gained momentum.”
The residential industry outlook has revived additional in Q4 2020, across all parameters, reflecting the elevated traction in this segment. “The impact of renewed consumer demand for residential realty has resulted in high levels of registration data, these transactions have lifted market sentiment. This bull run will be sustainable, growing through 2021, in the backdrop of the anticipated positive Union Budget – scripting the real estate revolution in India,” Hiranandani added.
It might be noted that a score of above 50 indicates ‘Optimism’ in sentiments, a score of 50 implies the sentiment is ‘Same’ or ‘Neutral’, when a score beneath 50 indicates ‘Pessimism’.