Sentiment among developers as well as non-developers such as private equity (PE) players and non-banking finance companies (NBFCs) in India’s real estate sector moderated in the April-June quarter compared to the previous quarter, a report released on Wednesday showed.
While overall sentiment remains optimistic, it has fallen significantly from the record high levels of the January-March quarter of this year.
According to the “Knight Frank-NAREDCO Real Estate Sentiment Index Q2 2024”, the current sentiment index score has moderated to 65 from 72 in the previous quarter. This score indicates the current outlook of stakeholders compared to six months ago.
The report notes that this drop in reading reflects a “careful assessment” as stakeholders navigate complex global economic scenarios and maintain an optimistic approach towards Indian market fundamentals.
The future sentiment index score, which represents expectations for the next six months, moderated more sharply to 65 from 73 in the previous quarter.
This, the report said, may be due to “caution around potential macroeconomic developments, including fiscal policies and geopolitical events, which could weigh on market sentiment.”
The report is based on a survey that includes questions on overall economic dynamism, availability of financing, project launches, sales volume, rental volume, prices and rents. A score of 50 represents a neutral or status quo view; a score above 50 demonstrates positive sentiment and a score below 50 indicates negative sentiment.
The results also highlighted the sentiments of developers and non-developers separately. While the non-developer sentiment score fell to 68 from 73 in the previous quarter, developer sentiment appears to have been hit harder.
There were 61 in the quarter, less than the 72 of the previous quarter.
The report notes that developers have witnessed strong sales in 2023, but a prolonged period of high sales has raised concerns around consolidation.
“Developers remain cautious but optimistic, having experienced strong sales since early 2023,” the report said.
“While the market initially looked poised for sustained growth with significant tailwinds, the extended bullish trend cycle has led to a more cautious stance as concerns have begun to emerge over a potential market consolidation,” he added.
It also showed that most Indians expect home prices to rise further in the next six months.
63% of respondents said they expected prices to rise and 36% expected them to remain stable. The rest of respondents predicted a fall.
“With positive sentiment driven by sustained growth in both the residential and office markets, this adjustment highlights the careful and measured approach of the sector, ensuring continued stability amidst the current economic and political developments,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.
First published: August 14, 2024 | 18:49 IS
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