After historic lows, real estate sentiment inches up in July-Sept

After two consecutive quarters of hitting record lows, the Knight Frank-Ficci-Naredco real estate sentiment index finally inched up during the July-September 2020 quarter, as the industry is gradually reviving with consumers, especially in the residential segment, firming up purchase plans.

Taking cue from the recent uptick in real estate activities, respondents of the 26th edition of the sentiment index survey demonstrated significant improvement in ‘future sentiments scores’ (for next six months) for the sector, Knight Frank India said.

The future sentiments score for Q3 2020 is in the optimistic zone at 52 points, up from 41 in the previous quarter. “Current sentiments score (for past six months) recorded a significant improvement from previous quarter low of 22 points to 40 points in Q3 2020. This revival in sentiments is attributed to the remarkable upturn seen in real estate business, especially in the residential segment, in third quarter of 2020 as a result of the unlocking process,” it added.

A score of more than 50 signifies ‘optimism’, while 50 means the sentiment is ‘same’ or ‘neutral’, and a score below 50 signifies ‘pessimism’.

The ‘current sentiments score’ in Q3 2020 jumped to 40 from a record low of 22 in Q2 2020, when the impact of the pandemic and lockdowns on businesses had become more apparent.

With partial restoration of business activity and improvement in macroeconomic indicators in Q3 2020, stakeholder sentiments for the real estate sector have revived substantially, the report said.

Knight Frank India chairman & MD Shishir Baijal said July–September 2020 saw residential sales volumes increase to 55% of pre-Covid-19 levels, showing signs of revival. Low home loan rates and discounts and attractive offers for residential homes have pushed sales velocity in the third quarter, he said.

Even while volumes are yet to catch up to pre-pandemic levels, the increase has been instrumental in perking up sentiments. Similar positivity is visible in the office sector as well, where a revival of leasing activities is being seen, he added.

Baijal said the return of end users to the market, especially in the residential segment, is a matter of cheer for the industry as it indicates economic confidence and long-term commitment. The festive season in Q4 2020 is likely to further support the revival is real estate sector.