Realty sentiment index remains upbeat: Report

The real estate sector has witnessed a notable phase of growth in recent quarters, with all major segments, including residential, office space, industrial, warehousing, and retail, demonstrating consistent progress

Hyderabad: Real estate developers and financial institutions are bullish on their outlook for the property market for the next six months and expect the high demand to sustain its momentum, according to a Knight Frank and Naredco report. The objective is to capture the perceptions and expectations of industry players to gauge the sentiment of the real estate

market. Real estate consultant Knight Frank and realtors' body Naredco (National Real Estate Development Council) on Sunday released their 39th edition of Real Estate Sentiment Index for Q4 2023 (October-December 2023). As per the report, the current sentiment index score remained in the optimistic zone, rising to 69 from 59 in the third quarter of 2023 calendar year.

Naredco President G Hari Babu said, “As we anticipate the 39th Knight Frank Naredco Real Estate Sentiment Index Report for Q4 2023, there's a positive shift in sentiment. The Current Sentiment Index reflects increased confidence, attributed to a stable Indian economic environment. The Future Sentiment also points to optimism about India's economic growth.”

“Globally, with easing inflationary pressures, there is a balanced risk perspective. Regionally, all zones maintain an optimistic outlook. Developer sentiment shows resilience, and non-developer entities express cautious optimism. The residential market sees increased confidence, and the office sector anticipates growth. This signals a positive trajectory for the next six months,” he said.

The sentiment index is based on the survey of supply-side stakeholders like developers, investors and financial institutions. A score of above 50 indicates 'optimism' in sentiments, a score of 50 means the sentiment is 'same' or 'neutral'. The score below 50 indicates 'pessimism'. The future sentiment score, which indicates stakeholders' outlook, has also increased from 65 in Q3 2023 to 70 in Q4 2023, driven by general optimism about the Indian economy and sustained demand in the realty sector, the report said.

Despite the Reserve Bank of India's 250 basis points increase in policy rates from May 2022 to February 2023 and a steady rise in residential prices, Knight Frank said India's top seven cities saw a ten-year high in annual residential sales, growing 5 per cent annually to 329,097 units in 2023. The residential market outlook reflects enhanced optimism on parameters of residential sales and launches, the report said.

Shishir Baijal, Chairman and Managing Director, Knight Frank India Pvt Ltd said: “India is advancing steadily towards its ambition of becoming the world's third-largest economy, targeting a GDP of $7 trillion by 2030. Assessing various indicators such as historical performance, ongoing investments, and future prospects, international agencies uniformly express optimism regarding India's trajectory.”

He said, “Despite inflationary pressures niggling at the growth rate, the Reserve Bank of India's timely interventions and stringent liquidity measures have sustained economic momentum. The recent revision of the RBI's forecast to 7 per cent for FY 2024 reaffirms India's resilience amid a global economic landscape still fraught with uncertainties.”

This narrative of economic stability and expansion finds resonance in the robust performance of the Indian real estate markets. The real estate sector witnessed exceptional performance in 2023, both in commercial and residential segments. Residential sales reached a decade-high, buoyed by increased transactions in high-value properties.

Concurrently, the commercial sector experienced its second-best year with 59.6 million square feet of office space transactions. Notably, Indian businesses and Global Capability Centres (GCCs) have been pivotal in driving office space uptake. These encouraging demand dynamics have propelled the sector forward, fostering positive market sentiments.