With the worry of the second wave of COVID-19, the Future Real Estate Sentiment score has fallen to 57 in Q1 2021 from 65 in Q4 2020, even although the Current Sentiment score has inched up marginally. The ‘Current Sentiment score’ recorded a marginal improvement, inching up from 54 in Q4 2020 to 57 in Q1 2021. This improvement can be attributed to the healthier momentum in the industrial and residential actual estate segments for the duration of Q4 2020 and for the duration of January – February 2021, according to the 28th Edition of Knight Frank-FICCI-NAREDCO Real Estate Sentiment Index Q1 2021 (January – March 2021) Survey.
Hampered by the second COVID wave issues, the Future Sentiment score (for the next six months) of stakeholders has fallen across regions, even although it remains in the optimistic zone. Similarly, the Q1 2021 outlook of provide side stakeholders reflects caution on the future of actual estate for the next six months, even if their scores stay in the optimistic zone.
With the substantial raise in COVID circumstances due to the fact March 2021, the outlook for residential launches and sales has softened in Q1 2021. Even so, the share of respondents that count on the residential market place to develop or stay steady in the next six months is more than 80%, across parameters of launches, sales and costs. Similarly, the second wave of COVID and the resultant mobility restrictions and attainable lockdowns in some cities has adversely impacted workplace occupancy levels. This has resulted in weakening of the workplace market place outlook for the next six months.
On the macroeconomic front, the pace of financial revival seems to have slowed down, with some crucial financial indicators displaying weakening more than the last two months. Influenced by the alter in macroeconomic developments, stakeholder outlook on the all round financial momentum and on credit availability has turned cautious in Q1 2021.
Commenting on the exact same, Shishir Baijal, Chairman and Managing Director, Knight Frank India, mentioned, “The sentiment of stakeholders remained cautious for both Current and Future Sentiment scores in Q1 2021, owing primarily to the second wave of the pandemic, resulting in economic uncertainties. The real estate sector had seen a strong bounce-back during the last few quarters, which has kept the future sentiment of stakeholders in the positive zone. With the Central government refraining from a second nationwide lockdown, the sector would be hoping to hold onto the progress made so far. As some regions have already announced movement restrictions, it will be imperative to observe the key economic indicators in the coming months to check the sustainability of the growth that the sector has already achieved. The speed at which the inoculation drive is conducted, and the intensity of local restrictions placed will be proportional to the growth of the real estate sector’s growth in the coming months.”
A score of above 50 indicates ‘Optimism’ in sentiments, a score of 50 implies the sentiment is ‘Same’ or ‘Neutral’, although a score beneath 50 indicates ‘Pessimism’.
Future sentiments dampened by second COVID wave
Source: Knight Frank Research Please note: Data for 2018 is out there for Q1 and Q4 only.
Influenced by the alter in macroeconomic developments and the second wave of COVID, stakeholder outlook on the all round financial momentum has faltered marginally in Q1 2021. 85% of the Q1 2021 survey respondents – down from the 93% of Q4 2020 – now count on improvement or stability in the all round financial overall health in the next six months. The remaining 15% – up from 7% in Q4 2020 – think that financial overall health would worsen more than the next six months.
On the credit availability front, the stakeholder outlook has shifted from positive to observant as 81% of the Q1 2021 survey respondents – down from the 87% of Q4 2020 – count on the funding situation to either boost or to stay the exact same for the coming six months.
Rajani Sinha, Chief Economist and National Director Research, Knight Frank, mentioned, “Since Q4 2020, the Real estate sector had started seeing a meaningful recovery in line with the overall macro-economic revival in the country. However, with the second wave of COVID raging in India, the real estate future sentiments have weakened, as the industry stakeholders grapple with the pandemic related uncertainties. With industry players turning cautious, the six month outlook for real estate has weakened across the parameters of demand, supply and pricing in Q1 2021, even while the sentiment scores continue to remain in the optimistic zone. Economy’s return to normalcy will depend on the pace of vaccination and the time taken to control the second wave of COVID. Apart from the pace of vaccination, government decisions on lockdown restrictions will largely determine the performance of real estate sector in the coming months.”
Office Market Outlook: New Supply, Leasing and Rents
The workplace market place was displaying a healthier recovery from Q4 2020. However, the second wave of COVID and the resultant mobility restrictions and attainable lockdowns in some cities have adversely impacted workplace occupancy levels. This has resulted in weakening of the workplace market place outlook for the next six months.
In Q1 2021, 58% of the survey respondents have been of the opinion that the new provide in the workplace market place would boost or stay the exact same in the coming six months.
As far as rentals are concerned, 44% of the Q1 2021 survey respondents count on workplace rentals to stay steady more than the next six months.
Residential Market Outlook: Launches, Sales and Prices
Even with the increasing COVID infections due to the fact March 2021, the share of respondents that count on the residential market place to develop or stay steady in the next six months is more than 80%, across parameters of launches, sales and costs.
In Q1 2021, 65% of the survey respondents have been of the opinion that residential launches will raise in the next six months. 26% respondents felt that new project launches would stay the exact same in the coming six months.
On the demand front, 64% of the Q1 2021 survey respondents count on an raise in sales activity more than the next six months. The share of respondents who anticipated the sales activity to continue at the exact same pace more than the next six months jumped from 13% in Q4 2020 to 23% in Q1 2021.
With regards to residential costs, 48% of the Q1 2020 survey respondents – up from 38% in Q4 2020 – think that costs will raise more than the next six months, although 43% have been of the opinion that costs would stay the exact same.