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Future sentiment index for real estate drops amid second wave of COVID-19

Future sentiments have fallen from 65 last quarter to 57 now

Budget 2019: Home buyers body want Rs 10,000-cr 'stress fund' to complete stalled projects Representative image

Future sentiments in India’s real estate industry have crashed following the onset of the second wave of the COVID-19 pandemic. As per the latest edition of the Real Estate Sentiment Index, future sentiments have fallen from 65 last quarter to 57 now.

The findings were released on Thursday. The survey was conducted by business chamber FICCI and the National Real Estate Development Council in association with realty consultant Knight Frank.

With the substantial increase in coronavirus cases, especially since last month, the outlook for residential launches and sales has softened in the first quarter of calendar year 2021. Even so, the share of respondents that expect the residential market to grow or remain steady in the next six months is more than 80 per cent, across parameters of launches, sales and prices.

Similarly, the second wave of COVID-19 and the resultant mobility restrictions and possible lockdowns in some cities has adversely impacted office occupancy levels. This has resulted in weakening of the office market outlook for the next six months.

Making matters worse has also been the slowing down of the pace of economic revival. Key economic indicators have showed weakening, especially since February, and has been a dampener to the recovery story everyone was optimistic of during the festive season and end of last year. Influenced by the change in macroeconomic developments, stakeholder outlook on the overall economic momentum and on credit availability has turned cautious at present.

“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,” noted Shishir Baijal, chairman and managing director of Knight Frank India. However, the second wave seems to have put paid to all that. “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,” he added.

“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,” Baijal said.

"There is no cause of worry for the Industry as it is well geared to mitigate the risk on ground. There will be a positive growth in the long run for Indian real estate,” said Niranjan Hiranandani, national president of NAREDCO and founder and managing director of Hiranandani Group.

The lowest point in the future sentiments of the Real Estate Index was after the breakout of the pandemic and the national lockdown last year, when it plummeted to 36. A score above 50 indicates ‘Optimism’ while that below 50 indicates ‘Pessimism’. Since Unlock started, the sentiments had improved way up to 65 in the new year—the highest in more than three years. But the second wave seems to be undoing it all.

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