Sector outlook slips to pessimistic

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. 

In sharp contrast to the preceding quarters, the overall current sentiment for the real estate sector has been rated at 47 points for the period April-June 2019. 

The overall slowdown in the economy, coupled with factors like the NBFC crisis, developer defaults and bankruptcies, have slackened the sentiments of the sector, especially for the residential segment. The situation is further compounded by factors like the ongoing liquidity crisis and a diminutive demand scenario. 

According to the latest Knight Frank-FICCI-NAREDCO-Real Estate Sentiment Index Q2 2019, the outlook for the next six months was scored at 52,  just above the neutral line. Stakeholders, while showing moderate optimism, are still cautious in their expectations on account of an overall economic slowdown that is impacting the real estate sector.

Weak demand, inventory overhang, developer defaults coupled with the worsening of the NBFC crisis has dried up funding for the sector, which in turn, has increased the borrowing cost and impacted finances for the already-strained sector. 

Adversely affected by the inventory pressure, weak demand and low buyer confidence, the future sentiment score for North India has gone in the pessimism zone in the second quarter of 2019,  while stakeholders in West India have also lowered their outlook for the next six months, which is in sync with the overall slowdown in the market sentiment.

Sentiments regarding residential price appreciation also look lacklustre with 75 per cent of the stakeholders opining that the residential prices will continue to remain muted. Taking cognisance of the slowdown the RBI has cut the repo rate by 110 basis points in the last four reviews however, reduction in the domestic spending and investment activity will loom large. TNS

In the doldrums

Residential segment seems to be in the doldrums with a majority 69 per cent of stakeholders maintaining that the residential sales will remain tepid or may even go down further over the nexr six months.

Positvity in Office segment

The sentiments, however, reversed for the office segment where the stakeholders’ outlook remains positive and both leasing and rents which are expected to be on an upward swing in the next six months.