Rama Krishna Sangem
Real estate sector in India is in its best time, in the last 10 years, says a report by top infrastructure consultancy, Knight Frank. Stable economic fundamentals, sustained post-pandemic momentum, and increased transaction volumes are the reasons for this optimism. The real estate industry touched a decadal high in the first quarter of 2024, a report released on May 20 Monday said.
The “Current Sentiment Index Score”, which reflects the stakeholders’ current outlook compared to the preceding six months, touched 72 in the quarter, the highest in the last 10 years, according to the Knight Frank-NAREDCO Real Estate Sentiment Index Q1 2024 (January–March) report. In the previous quarter, it was 69.
A score of 50 indicates neutrality, above 50 signals positive sentiment, and below 50 denotes negative sentiment. It is determined by surveying developers as well as non-developers (including NBFCs) on parameters related to sales volume, launches, funding availability etc.
According to the report, the main driver of optimism is the residential market. As many as 82 per cent of the respondents expect residential prices to rise in the near future. “Interestingly, this is the highest level of optimism recorded in the past decade, with no response indicating a potential price decline,” it said.
Residential sales to go up in 6 months
Moreover, 73 per cent also said that they expect residential sales to increase further in the next six months. This was 65 per cent in the previous quarter. As many as 80 per cent of respondents said that the residential launches are also likely to improve in the next six months, higher than 71 per cent in Q4 2023.
In the office market, the sentiment is lower than in residential but still very optimistic. In Q1 2024, 74 per cent of respondents said they expect office leasing to improve in the next six months, compared to 69 per cent in the previous quarter.
“Since the pandemic, optimism towards a rise in the office leasing market has grown significantly and the share of respondents having an opinion towards further increase has reached its highest in this quarter,” the report said.
“India’s office market has sustained the momentum gathered post-pandemic, witnessing year-on-year growth of 43 per cent in office leasing for Q1 2024 compared to the same period in the previous year.” During the quarter, 65 per cent of respondents said that office rents would rise in the coming months. This is much higher than 53 per cent in the previous quarter.
“India’s stable economy and post-pandemic recovery efforts have instilled confidence in the office market, driving increased transaction volumes and fostering an environment conducive to investment and growth,” said Shishir Baijal, chairman and managing director at Knight Frank India.
But, the optimism around the increase in office supply has cooled down from 62 per cent to 58 per cent in the quarter. That shows more offices are either downsizing their space needs or switching over to online modes of functioning. Still, the demand for real estate is expected to pick up after the current Lok Sabha elections.
