As per Knight Frank-NAREDCO Real Estate Sentiment Index 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 (RBI).
The rise in the Current Sentiment Score primarily stems from the strength of India's economic landscape, marked by sustained GDP growth numbers and a controlled economic policy environment. Confidence among real estate stakeholders has surged as Indian enterprises, including those in the real estate sector, anticipate further gains from a flourishing domestic economy.
The Future Sentiment score, which indicates stakeholders' outlook, has also increased from 65 in Q3 2023 to 70 in Q4 2023, driven by general optimism about the Indian economy and sustained demand in the real estate sector. The quarterly Knight Frank-NAREDCO report captures the current and future sentiments towards the real estate sector, the economic climate and funding availability as perceived by the supply-side stakeholders like developers and financial institutions. status quo:50 represents a neutral view or status quo; a score above 50 demonstrates a positive sentiment; and a score below 50 indicates a negative sentiment.
In 2023 it was reported that office transactions in India surged by 15% YoY, resulting in a total absorption of 59.6 mn 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 Reserve Bank of India's 250 basis points 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% YoY 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.
The Developer Future Sentiment Score scaled up from 66 in Q3 2023 to 68 in Q4 2023. With the RBI monetary policy committee’s (MPC) status quo on policy repo rate for the sixth consecutive occasion, real estate developers remain optimistic about growth in the sector for the next six months.
The non-developer (which includes banks, financial institutions, PE funds) Future Sentiment Score rose from 64 in Q3 2023 to 73 in Q4 2023. The institutional investors that remained watchful in the past periods, exhibited enhanced confidence in the Indian economy.
In Q4 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.
Based on the findings of the survey, stakeholder sentiments on the overall economic momentum have only strengthened with each passing quarter in the past year. In comparison to 56% in Q3 2023, 71% of survey respondents in Q4 2023 indicated an increase in their expectations on economic growth momentum. As India’s domestic economy continues to remain steady, it is anticipated that business and consumer optimism would strengthen further.
The office outlook exhibited buoyancy on leasing and supply parameters as survey respondents remained confident about this sector in the next six months. Stakeholders opined that demand in India’s office market will bolster in the next six months and give a fillip to new supply as well.
