News: Realty business condence makes a comeback as realtors, banks, PE rms optimistic-28-01-2021
Synopsis
While real estate activity in both residential and commercial segments saw an upturn following in the last few months, many were doubtful of the momentum after factoring the conversion of pent-up demand. The business condence is witnessing a gradual comeback aided by the government’s supportive measures, record low interest rates and the resultant pick-up in end-user demand.
MUMBAI: With improving indicators and the Indian economy’s gradual return to normalcy post the Covid19 pandemic, the uncertainty over sustainability of growth momentum in the real estate sector is getting replaced with rising business condence among developers and nanciers. While real estate activity in both residential and commercial segments saw an upturn following in the last few months, many were doubtful of the momentum after factoring the conversion of pent-up demand. The business condence is witnessing a gradual comeback aided by the government’s supportive measures, record low interest rates and the resultant pick-up in end-user demand. The future sentiment score, captured by a Knight Frank, FICCI and NAREDCO joint survey, has witnessed a robust surge to 65 points from 52 points in the September quarter. The current sentiment score, for the rst time in 2020, entered the optimistic zone at 54 points in the fourth quarter, a signicant
“As we begin our journey into 2021 with a positive outlook, it is important to closely watch the performance of the key economic indicators in the coming months to check the sustainability of the growth seen in the last two quarters of 2020. Equally crucial is the development of the vaccine and its widespread availability for the masses. As these two factors will largely determine the performance of the real estate sector in the coming months,” said Shishir Baijal, CMD, Knight Frank India Geographically, the western region saw the sharpest jump in future sentiment index at 66 during the quarter from 47 in the previous quarter. North With respect to stakeholders, both developers and non-developers including banks, non-banking nance companies and private equity funds, recorded an improvement in future sentiment score during the quarter. “The survey mirrors recovery expectations of not just real estate, but the economy. Investments in real estate over the recent past reect positive sentiments on part of investors, domestic as well as global, on the resurgence in the Indian economic growth story. This is a clear indicator of the bullish growth story of Indian Real Estate and reects on the growth prospects of 270 allied industries as also job creation,” said Niranjan Hiranandani, National President, NAREDCO
A score of above 50 signies ‘Optimism’ in sentiments, a score of 50 means the sentiment is ‘Same’ or ‘Neutral’, while a score below 50 shows ‘Pessimism’. A cumulative score is arrived at on the basis of responses and assigned weightage. “After almost a year of working remotely during a global pandemic, the workforce is already thinking about their gradual returns to the workplace. The signs of recovery are already showing… The insurgent growth is going to impact logistics related infrastructure including warehousing, Positively. Within real estate, certain asset classes like retail may have a longer recovery cycle, while other sectors like data centres, cloud kitchens and co-working may see an uptick in demand in the immediate to medium term,” said Raj Menda, Joint Chairman, FICCI Real Estate Committee. The future sentiment score has climbed up mirroring the strong recovery expectations prevalent in the market. Other regions including the east and north also improved, while the already bullish south region improved marginally. Stirring demand and festivities in the December quarter has helped not only the realty sector but also the economy at large. The improvement in highfrequency indicators recorded since September continued in December too. The Goods and Services Tax (GST) collections in December were at a record high whereas the Purchasing Managers’ Index (PMI) for manufacturing recorded a fth straight month of expansion. This economic growth environment has raised the market’s expectations of recovery in the coming six months. Any further demand boosting measures announced by the government in the upcoming Union Budget 2021, will provide strong llip to the property sector.
