Future real estate sentiment scores remain optimistic, Knight Frank-FICCI-NAREDCO Real Estate Sentiment Index Q2 2021 | Demand remains strong in real estate, this half will be solid for the market

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Despite the second wave of Kovid, the future sentiment of the players of the real estate sector in the June quarter, ie the forecast for the next six months, remains positive. This has been mentioned in the Knight Frank-FICCI-NAREDCO Real Estate Sentiment Index Q2-2021 (April-June 2021). Apart from developers, realty market players include banks, financial institutions and PE funds.

Future Sentiment Score one point lower than May in June quarter

The reaction of market players to the market conditions during this June quarter was not as severe as it was in the first wave. This is reflected in the marginal drop of one point in the Future Sentiment Score (56) during this period (June quarter). A score of 50 is ‘neutral’, a score above that is ‘hopeful’ and a score below that is ‘pessimistic’.

Current sentiment score down from 57 in March quarter to 35

The current sentiment score of the real estate market declined to 35 in the June quarter from 57 in the March 2021 quarter. The current sentiment score for this June quarter is weak, but is well above 22 in the same quarter last year. The current sentiment score of the realty sector had hit an all-time low in the June 2020 quarter.

Highest recovery in Future Sentiment Score in Western Region

If we look at the future sentiments of the real estate sector zone-wise, the western region saw the biggest recovery in the futures sentiment score. The Future Sentiment Score of this zone increased from 53 in the March quarter to 60. According to the report, the sentiment for the next six months is still full of expectations due to the resumption of economic activities.

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Outlook for residential housing market remains ‘hopeful’

According to the report, the outlook for the residential housing market in the June quarter remains ‘hopeful’. During this period, more than half of the survey participants said that there could be an increase in house launches and sales in the next six months.

More than 80% expect the economy to be better in the next six months

As far as the economy is concerned, more than 80% of the participants are expecting the economy to be in good shape in the next six months. 46% of the survey participants said that loan availability has improved in June as compared to the March quarter. 41% of participants were expecting this in the first quarter.

Availability of vaccines, vaccination programs and economic activities have a big hand

Shishir Baijal, CMD, Knight Frank India, said that better availability of vaccines, a solid immunization program and ongoing economic activity have been instrumental in keeping the Future sentiment score strong in the June quarter as compared to last year. According to him, the demand for office and residential houses may come out in the market but it is suppressed due to Kovid.

Lessons from the first wave and a less strict lockdown helped

According to Rajni Sinha, Chief Economist and National Director-Research, Knight Frank, “The second wave of Kovid in the June quarter spoiled the sentiment of the real estate sector. The lessons of the first wave and a less strict lockdown gave us the ability to bear the economic loss. This is reflected in the current sentiment score, which is significantly above the low of 22 in the June quarter last year.

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