Realtors, financial institutions optimistic about growth in real estate sector - Hindustan Times
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Realtors, financial institutions optimistic about growth in real estate sector: Report

Feb 18, 2024 05:55 PM IST

A survey of developers, investors and financial institutions, has shown that the Current Sentiment Index Score remained firmly in the optimistic zone

The Current Sentiment Index Score remained firmly in the optimistic zone, rising to 69 from last quarter's score of 59, according to the 39th edition of the Knight Frank-NAREDCO Real Estate Sentiment Index for Q4 2023 (October-December 2023).

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 supply-side stakeholders included developers, investors and financial institutions.

The Current Sentiment Index Score remained firmly in the optimistic zone, rising to 69 from last quarter's score of 59, according to the 39th edition of the Knight Frank-NAREDCO Real Estate Sentiment Index for Q4 2023 (October-December 2023). (HT Archive/representational image)
The Current Sentiment Index Score remained firmly in the optimistic zone, rising to 69 from last quarter's score of 59, according to the 39th edition of the Knight Frank-NAREDCO Real Estate Sentiment Index for Q4 2023 (October-December 2023). (HT Archive/representational image)

This increase is attributed to India's domestic economy continuing its growth trajectory, due to timely interventions by the Reserve Bank of India (RBI). The rise in the Current Sentiment Score primarily stems from the strength of India's economic landscape, marked by sustained GDP growth numbers and a controlled economic policy environment., it said

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Confidence among real estate stakeholders has surged as Indian enterprises, including those in the real estate sector, anticipate further gains from a flourishing domestic economy, said Knight Frank’s 39th edition of Real Estate Sentiment Index for Q4 2023 (October-December 2023).

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 real estate sector.

Also Read: Bengaluru ranks 8th and Mumbai 9th in annual housing price growth index across Asia Pacific region

In 2023 it was reported that office transactions in India surged by 15% YoY, resulting in a total absorption of 59.6 mn sq ft, approaching an all-time high. Despite office leasing volumes being slightly lower than the peak in 2019, the strong occupier activity underscored the country's economic robustness.

In the residential sector, even though 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, the country saw a ten-year high in annual residential sales, growing by 5% YoY to 329,097 units in 2023, it showed.

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. The office market outlook exhibits buoyancy on all key parameters - leasing, supply and rents as the stakeholders remained confident of the performance of this asset class in the next six months.

Also Read: Affordability to buy home to rise to a three-year high in 2024, on expectations of interest rate cuts

The Developer Future Sentiment Score scaled up from 66 in Q3 2023 to 68 in Q4 2023. With the RBI monetary policy committee’s (MPC) status quo on policy repo rate for the sixth consecutive occasion, real estate developers remain optimistic about growth in the sector for the next six months.

The Non-Developer (which includes banks, financial institutions, PE funds) Future Sentiment Score rose from 64 in Q3 2023 to 73 in Q4 2023. The institutional investors that remained watchful in the past periods, exhibited enhanced confidence in the Indian economy.

Shishir Baijal, Chairman and Managing Director, Knight Frank India, said, “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. This growth is underpinned by the country's stable economic outlook, corroborated by various agencies assessing indicators such as historical performance, ongoing investments, and prospects, all of whom have expressed optimism regarding India's economic growth trajectory.”

Also Read: Is capital appreciation the key motivation for rich real estate investors to buy luxury properties?

G. Hari Babu, President-NAREDCO, said, “There's a significant positive shift in Q4 2023 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."

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