According to Knight Frank India and NAREDCO, the sentiment index for the real estate sector declined in the April-June period but remained positive due to two rounds of repo rate hikes.
The outlook for the next six months is optimistic, though not as encouraging as it was during the March quarter.
According to the Knight Frank-Naredco Real Estate Sentiment Index Q2 (April-June 2022), the current sentiment score has gone up to 62 from a record 68 reported in January-March.
The sentiment index is based on a survey of supply-side stakeholders such as developers, investors and financial institutions. A score above 50 indicates ‘optimism’ in sentiment, a score of 50 means the sentiment is ‘similar’ or ‘neutral’. A score below 50 indicates ‘pessimism’.
The current sentiment index score has dropped mainly due to the perceived impact of two consecutive repo rate hikes in May and June 2022.
The Future Sentiment Score, which captures the stakeholder sentiments for the next six months for the real estate sector, rose from its all-time high of 75 in Q1 2022 to 62 in Q2 2022 due to increased inflation and depreciation pressures of the rupee against the rupee. In form of. Dollar casts a shadow over the sector, the advisory said.
“Despite the decline, both current and future sentiment scores remained optimistic,” it added.
In Q2 of 2022, the Current Sentiment Index score and the Future Sentiment score are on par as stakeholders are confused in the current economic environment, where the impact of global economic headwinds on the Indian economy is yet to come.
“Stakeholders on the real estate supply side remain cautious of tripartite global risks – the economic turmoil in the United States, the Russia-Ukraine standoff, and the economic slowdown in Europe,” Knight Frank said.
Interestingly, the study showed that while developers’ future sentiment scores increased during the quarter, non-developers’ scores declined.
“Despite rising cost pressures and costlier home loans, optimism among developers is on account of strong demand trend from home buyers,” the advisory said.