Future sentiment index for real estate drops amid 2nd wave of COVID-19

Future sentiment index for real estate drops amid 2nd wave of COVID-19

AgenciesUpdated: Friday, April 23, 2021, 10:00 AM IST
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The onset of the second major wave of the COVID-19 pandemic has led to a fall in future sentiments index in the real estate industry for the next six months but it still remains in an optimistic zone, according to a report.

As per the 28th Edition of Knight Frank-FICCI-NAREDCO Real Estate Sentiment Index Q1 2021 (January - March 2021) Survey, the 'Future Sentiment score' saw a decline from 65 in Q4 2020 to 57 in Q1 2021 due to uncertainties amid spread of a second wave of COVID - 19 infections.

However, it remained in the optimistic zone.

"The 'Current Sentiment score' recorded a marginal improvement, inching up from 54 in Q4 2020 to 57 in Q1 2021. This improvement can be attributed to the healthy momentum in the commercial and residential real estate segments during Q4 2020 and during January - February 2021," Knight Frank India said.

A score of over 50 signifies optimism in sentiment, a score of 50 means the sentiment is neutral, while a score of below 50 shows pessimism.

Similarly, the Q1 2021 outlook of supply side stakeholders reflects caution on the future of real estate for the next six months, even if their scores remain in the optimistic zone.

With the substantial increase in COVID-19 cases since March 2021, the outlook for residential launches and sales has softened in Q1 2021.

Even so, the share of respondents that expect the residential market to grow or remain steady in the next six months is more than 80%, across parameters of launches, sales and prices.

Similarly, the second wave of COVID and the resultant mobility restrictions and possible lockdowns in some cities has adversely impacted office occupancy levels. This has resulted in weakening of the office market outlook for the next six months.

Shishir Baijal, Chairman and Managing Director, Knight Frank India said, "The sentiment of stakeholders remained cautious for both Current and Future Sentiment scores in Q1 2021, owing primarily to the second wave of the pandemic, resulting in economic uncertainties." The real estate sector had seen a strong bounce-back during the last few quarters, which has kept the future sentiment of stakeholders in the positive zone, he said.

"With the central government refraining from a second nationwide lockdown, the sector would be hoping to hold onto the progress made so far," Baijal said.

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