Residential realty market muted in Q2: Survey

AHMEDABAD: The

residential

real estate market across the country continued to remain muted in terms of new launches, sales and prices during the

second quarter

of 2020. Real estate players, however, expect the next six months to be moderately better, states a recent real estate sentiment index survey for the April-June quarter.

Although the residential real estate market was subdued in the second quarter, about 50% of the

industry stakeholders

surveyed opined that the situation for new launches of residential projects will either improve or remain the same in the next six months.

The survey was conducted by the real estate consultancy firm Knight Frank, National Real Estate Development Council (Naredco) and Federation of Indian Chambers of Commerce and Industry (Ficci).

With respect to sales, 31% of the stakeholders were of the opinion that residential sales will get better in the next six months.

“In all, 49% of the respondents feel that prices will weaken further in the next six months, while the remaining 51% think that prices will continue to remain around the current levels or increase in the next six months,” added the survey. The survey pegged the current real estate sentiment at its lowest level of 22 for the second quarter.

According to the survey, a score of 50 represents a ‘neutral’ view or status quo and a score above 50 demonstrates a ‘positive’ sentiment. A score below 50 indicates a ‘negative’ sentiment.

The survey indicated that the ‘future sentiment score’ of the stakeholders, though still in the

pessimistic scoring zone

, has seen an improvement at 41 in Q2 2020 against 36 in Q1 2020. This is attributed to an expected improvement in macroeconomic indicators and the adoption of new business models shaping the recovery in the next six months. The survey covers key supply-side stakeholders including developers, private equity funds, banks and non-banking financial companies (NBFCs).

“With some of the macroeconomic indicators showing a marginal improvement and with the impending festive season in the second half of the year, the stakeholders have shown improved sentiments compared to the previous quarter, though they have remained in the pessimistic zone,” said Shishir Baijal, CMD, Knight Frank India.