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Realty stakeholders business outlook moves up optimistic zone on steady India economy


Stakeholders in the real estate industry, such as developers, financiers, and institutional investors, remain confident about the business outlook for the next six months backed by the Indian economy’s resilience and sustained growth amidst global recessionary conditions and ongoing demand in the property market.

Both present and anticipated sentiments regarding the real estate sector, economic conditions, and funding availability, as perceived by industry suppliers, point towards an optimistic and favourable business environment.

The future sentiment score, which indicates stakeholders’ outlook, has increased from 65 in the September quarter 2023 to 70 in the December quarter, driven by general optimism about the Indian economy and sustained demand in the real estate sector, showed Knight Frank-NAREDCO Real Estate Sentiment Index April -June 2023.

The current sentiment index score remained firmly in the optimistic zone, rising to 69 from last quarter’s score of 59. This increase is attributed to India’s domestic economy continuing its growth trajectory, due to timely interventions by the Reserve Bank of India.

“The real estate sector has witnessed a notable phase of growth in recent quarters, with all major segments, including residential, office space, industrial, warehousing, and retail, demonstrating consistent progress. This growth is underpinned by the country’s stable economic outlook, corroborated by various agencies assessing indicators such as historical performance, ongoing investments, and prospects, all of whom have expressed optimism regarding India’s economic growth trajectory,” said Shishir Baijal, CMD, Knight Frank India.

In 2023, residential sales reached a decade-high, driven by increased transactions in high-value properties. Simultaneously, the commercial office sector experienced its second-best year, with 59.6 million sq ft of office space transactions.“There’s a significant positive shift in Q4 2023 sentiment…Globally, with easing inflationary pressures, there is a balanced risk perspective. Regionally, all zones maintain an optimistic outlook. Developer sentiment shows resilience, and non-developer entities express cautious optimism. The residential market sees increased confidence, and the office sector anticipates growth. This signals a positive trajectory for the next six months,” said G. Hari Babu, President, NAREDCO.According to Baijal, the optimism among stakeholders towards real estate, both for the present and the future, is firmly rooted in a prolonged period of growth, which now appears to be sustainable for the mid to long term, bolstered by robust demand trends and fuelled by significant infrastructure development, thereby creating more opportunities for development stakeholders.

In 2023, office space transactions in India surged by 15% from a year ago, resulting in a total absorption of 59.6 million sq ft, approaching an all-time high. Despite office leasing volumes being slightly lower than the peak in 2019, the strong occupier activity underscored the country’s economic robustness.

In the residential sector, even though the central bank’s 250-basis-point increase in policy rates from May 2022 to February 2023 and a steady rise in residential prices, the country saw a ten-year high in annual residential sales, growing by 5% on-year to 329,097 units in 2023.

The residential market outlook reflects enhanced optimism on parameters of residential sales and launches, as stakeholders remain confident of the sustained demand momentum to drive activity in the market. The office market outlook exhibits buoyancy on all key parameters – leasing, supply and rents as the stakeholders remained confident of the performance of this asset class in the next six months.

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