Outlook for realty plunges to a 21-month low in June quarter

The future sentiment of Indian real estate has declined to a 21 month low in the quarter ended June indicating a significant decline in optimism relating to its future performance, a recent survey said.

According to a survey jointly conducted by FICCI-NAREDCO-Knight Frank, the future sentiment score during the quarter stood at 47. “Indian real estate stakeholders have downgraded the current period outlook for the ongoing six months to ‘Pessimistic’, indicating no improvement in the level of on-ground activities for the sector,” said the survey.

The survey mentions that weak demand, inventory overhang, developer defaults coupled with the worsening of the NBFC crisis has dried up funding for the sector. The outlook for the residential new launches, sales and price appreciation has also taken a hit in Q2 2019.

A majority 69% of the stakeholders have maintained that the residential sales will remain tepid or may even go down further in the coming six months. Sentiments regarding residential price appreciation also look lackluster with 75% of the stakeholders opining that the residential prices will continue to remain muted, mentioned the survey.

Niranjan Hiranandani as a National President of apex real estate body NAREDCO flags off the alarming concerns of the sector by voicing that, “The deepening economic slowdown compounded with subdued investment outlook and sluggish consumption appetite have hampered the GDP growth traction. A quick line of action from Central Government and apex regulatory bodies will be paramount in easing the pessimistic scenario looming over the sector for a positive outgrowth, he concluded.

As per the survey, 74% of the stakeholders have opined that the economic situation will be the same or may even worsen in the coming six months showing low confidence on market situation to be able to elevate the current situation. Financial institutions have moved into the ‘pessimistic’ zone at 48 while developers remain just over neutral at 52 mostly guided by the growth in affordable housing, it mentioned.

Nearly, 53% of the stakeholders have opined that the funding scenario may worsen in the next six months with lenders exercising caution in lending to sectors such as real estate, automobile, and other consumer-driven sectors.

“The ‘pessimistic’ outlook of stakeholders of real estate has only reiterated the current negative growth conditions that the sector is staring into. The economic slowdown, which has moved well beyond real estate into segments like auto, FMCG and FMCD, is firmly establishing a slowdown in buyer sentiments, indicating a further delay in an end-user purchase decision. The real estate sector in specific has been witnessing tough sales environment which is only expected to continue.” said Shishir Baijal, Chairman and Managing Director of Knight Frank India.

However, office segment showed a much better future trend than residential. The outlook for office sector remained positive as 83% of respondents opined that office supply as well as demand will see positive movement. Stakeholders also gave a positive outlook towards rental growth for the next six months.

News Source: Economic Times, Url: https://bit.ly/31HG1dI

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