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Realty Sentiment on a Record High

Torbit - May 25, 2024 - - 0 |

Amidst a robust economy, healthy demand-supply dynamics, and unhindered growth of the sector, the real estate sentiment index is mirroring the upsurge.   

According to a recent  NAREDCO- Knight Frank Real Estate Sentiment Index Q1 2024 (January – March) report, there is an unprecedented surge in market confidence amongst the supply side of real estate, marking a significant milestone in the sector. The Current Sentiment Index Score has soared to 72, ascending from last quarter’s 69, and setting a decadal high mark.

Driven by a strong domesticeconomy, the Future Sentiment Score  also saw an uplift, climbing  from 70 in Q42023 to 73 in Q1 2024.  This positive trajectory reflects stakeholders’ sustained optimism regarding the Indian economy and the enduring demand in the real estate market.

The residential market outlook in Q1 2024 is particularly promising, with 82 percent  of respondents anticipating a rise in residential prices. Similarly, the office market outlook remains buoyant, with stakeholders confident in the performance across leasing, supply, and rent over the next six months.

The quarterly NAREDCO- Knight Frank report provides a comprehensive analysis, through a primary survey, of current and future sentiments in the real estate sector, considering the economic climate and funding availability as perceived by supply-side stakeholders and financial institutions. A score of 50 indicates neutrality, scores above 50 signal positive sentiment, and scores below 50 denote negative sentiment.

Current and Future Sentiment Scores

Score/Quarter Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1

2023

Q2

2023

Q3

2023

Q4

 2023

Q1 2024
Current Sentiment Score 68 62 61 59 57 63 5959 69 72
Future Sentiment Score 75 62 57 58 61 64 65 70 73

Source: Knight Frank India

Sentiments of Developers and Non-Developers Inch Up further in the Optimistic Zone

The Developer Future Sentiment Score scaled up from 68 in Q4 2023 to 71 in Q1 2024. With strong buyer sentiment for property and the Reserve Bank of India’s (RBI) consistent policy on the repo rate for over a year, real estate developers remain optimistic about sector growth over the next six months.

Meanwhile, the Non-Developer Future Sentiment Score, which includes banks, financial institutions, and private equity funds, remained stable at 73 across Q4 2023 and Q1 2024. Although institutional investors have maintained a cautious stance, their confidence in the Indian economy has notably increased during this period.

According to Hari Babu, President Naredco, as stakeholders demonstrate unwavering optimism , driven by the government’s commitment to aggressive economic growth , India maintains stability and offers fertile ground for real estate growth. The highest recorded Current Sentiment Index underscores notable trends with significant upsurges in new launches, sales and prices.   

Residential market outlook reflects enhancement in sales and launches

In Q1 2024, the residential market outlook reflects enhanced optimism on parameters of residential sales and launches, as stakeholders remain confident of the sustained demand momentum to drive activity in the market.As many as 73 percent respondents expect residential sales to go up in next 6 months against 65 percent in the previous quarter. The positive homebuyer sentiment and stability in home loan interest rate has led stakeholders to expect that growth in demand will prevail in the residential sectorover the next 6 months. Eighty percent respondents opine that residential launches will improve while 82 percent expect residential prices to increase.

Strong Future Outlook for Residential Market

Q1 2024 Residential Sales Residential Launches Residential Prices
Increase 73% 80% 82%
Same 15% 8% 18%
Decrease 12% 12% 0%

Source: Knight Frank Research

Office market outlook exhibits buoyancy on all parameters

The office outlook exhibited buoyancy on leasing and supply parameters as survey respondents remained confident about this sector . Stakeholders opined that demand in India’s office market will bolster in the next six months and give a fillip to new supply as well. As many as 74 percent respondents expect office leasing to improve , 58 percent expect office supply to improve  and 65 percent expect office rents to increase in the next 6 months.

Buoyancy in Office Market Outlook

Q1 2024 Office Leasing New Office Supply Office Rents
Increase 74% 58% 65%
Same 15% 27% 29%
Decrease 11% 15% 6%

Source: Knight Frank Research

There is an optimism about availability of capital as 58 percent respondents expect increase in the funding. Shishir Baijal, CMD, Knight Frank India opines that stakeholders’ optimism about the economy and sustained real estate demand and sales, promising time for the real estate sector with ample opportunities for investment and expansion.

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