Real estate sector is optimistic: Property developers and financial institutions are expressing cautious optimism about the growth prospects of the real estate sector over the next six months, despite the challenges posed by geopolitical uncertainties. According to the latest report from Knight Frank and NAREDCO, the outlook for the real estate market remains positive, albeit tempered by concerns about upcoming economic and political developments.
The 41st edition of the Knight Frank-NAREDCO Real Estate Sentiment Index for Q2 2024 (April-June 2024) reveals that the current sentiment index score has moderated to 65, down from the all-time high of 72 recorded in Q1 2024. Similarly, the future sentiment score has declined to 65 from 73 in the previous quarter, reflecting a more cautious outlook.
While both the current and forward sentiment indexes remain in positive territory, indicating confidence in the sector’s long-term potential, the recent decline suggests a more measured outlook on near-term growth. The report highlights that this adjustment is influenced by factors such as election and budget speculation, as well as broader macroeconomic concerns.
“This recalibration of sentiment is likely driven by anticipatory caution around potential macroeconomic changes, including fiscal policy shifts and geopolitical developments that could impact market sentiment,” Knight Frank said in the report. Despite the decline in sentiment scores, the real estate sector continues to demonstrate resilience, particularly in the residential and office markets.
The quarterly report, which measures the mood of supply-side players and financial institutions, provides insight into the current and future outlook for the real estate sector, the overall economic climate and the availability of financing. A sentiment score above 50 indicates a positive outlook, while a score below 50 reflects negative sentiment.
Shishir Baijal, Chairman and Managing Director, Knight Frank India, stressed that the current and future score of 65 should not be a cause for concern. “This recent drop simply indicates a shift towards cautious optimism in the real estate sector,” Baijal said. He further noted that the economy is on a positive trajectory, with key indicators showing stability despite ongoing global geopolitical challenges.
Baijal also highlighted that the positive sentiment is due to sustained growth in both the residential and office markets. “This adjustment underlines the careful and measured approach of the sector, which ensures continued stability amidst the ongoing economic and political developments,” he added.
(with PTI inputs)
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