Sentiments in the real estate sector have remained optimistic and touched new highs on the Knight Frank – NAREDCO Real Estate Sentiment Index Q1 2022. The survey noted that Current Sentiment soared to a new high of 68 – indicating that most stake holders experienced positive developments in their businesses in the last 6 months including the period of the survey. Importantly, the Future Sentiment score recorded at 75 was at a historical best. This score indicates the expectations of the developers/investors for the next six months from the time of the survey. The flagship survey is in its 32nd edition.
The Current Sentiment score increased from 65 in Q4 2021 to 68 in Q1 2022 as the last six months remained positive for growth for most real estate stake holders. As the Indian economy navigated the third wave whilst being faced by uncertainty of a war in Europe, the real estate sector momentum remained unabated, especially of the residential segment. Commercial real estate segments also showed growth after the hiatus of the pandemic. While the sentiments have been positive for the two previous quarters, this score is one of the best reached in the history of the survey.
The Future Sentiment score, which gauges the stakeholders’ expectations for the next six months, also soared to 75 in Q1 2022 in view of a resolute economic outlook and continued demand for real estate space across asset classes. With the removal of all COVID-19 protocols by the Indian government, there is a further boost in sentiments.
When asked on their Economic Outlook for India, 85% of respondents in Q1 2022 expect the overall economic momentum to improve over the next six months. In terms of Credit Availability Outlook, 66% of the respondents expect the funding availability to increase over the next six months, while 29% expect it to remain the same during the period.
Shishir Baijal, Chairman and Managing Director, Knight Frank India said, “The growth in the residential market has been impressive, elevating the sentiments of the entire sector. As most companies start calling their staff back to work, office space demand has also been growing steadily. The buoyancy in stakeholders’ take on the sector reflects positively in both the Current and Future Sentiment Scores. However, geo- political tensions impacting crude oil prices, are leading to a rise in inflation in Indian market, which can impact demand from end users. The scenario is further complicated with supply chain disruptions, rise in input cost and an impending interest rate hike, all of which need to be watched carefully in the near future.”
South Zone remains the most optimistic market with the highest score across zones in the current quarter. The Future Sentiment Score for South has inched up from 64 in Q4 2021 to 66 in Q1 2022. Compared to Q4 2021, the Future Sentiment score for the North Zone has inched up substantially with an increase from 57 in Q4 2021 to 65 in Q1 2022 as key markets in the North Zone recorded good traction in both office and residential sectors. The other zones – West and East – maintained their optimistic position with a score of 57 each. Despite a marginal fall in East, where the score altered from 58 in Q4 2021 to 57 in Q1 2022, both these regions remained in the optimistic territory.
Rajan Bandelkar, President, NAREDCO India and Director of Raunak Group said, “Amidst the geopolitical tensions and a slow economy witnessed over the past few months, the real estate sector in India remained impacted during the first quarter of the year. A result of the global uncertainties - a rise in the cost of raw materials such as steel, cement etc - is a concern for the sector. However, these concerns will likely get mitigated in the next few quarters."
With high vaccination coverage and improving business environment, the outlook towards the Indian office market has enhanced considerably in Q1 2022. As COVID-19 restrictions have been scaled back nationally in March 2022, 72% of respondents felt that office leasing will maintain a healthy growth curve in the next six months.
80% of the survey respondents expect residential sales to increase in the next six months. This is a significant improvement over Q4 2021, when 72% of the respondents had a similar view.
The Real Estate Sentiment Index Report Q1 2022
Home-buyers are exhibiting strong appetite for better housing - Shishir Baijal, MD, Knight Frank India