The sentiment in the real estate industry touched an all-time low in the March quarter due to Covid-19 crisis, said a survey.
According to Knight Frank-Ficci-Naredco Real Estate Sentiment Index Q1 2020 Survey, the sentiment (of developers and lenders) that showed signs of revival during the October-December quarter of 2019 has suffered a setback because of the Covid-19 crisis, with both current and future sentiment index falling to an all-time low in pessimistic zone.
More than 60 per cent of the stakeholders (developers and lenders) have opined that the current situation will affect residential launches, sales and prices in the next six months. The residential sector, which already had concerns of weak demand, will find it difficult to launch new projects and complete the ongoing ones because of construction halts and labour shortage, Knight Frank said.
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The slew of measures announced by the government such as last-mile funding of affordable housing, rationalisation of the GST rates, liquidity support to HFCs and NBFCs were desirable steps to revive the sector. However, in the current situation, further stimulus will be required to revive the sentiments and invigorate demand, it added.
Shishir Baijal, chairman and managing director of Knight Frank India, said, “There is already a severe shortage of liquidity due to the complete standstill. Even while the government and the RBI have provided some stimulus, further support may be required to help the real estate sector and for the economy to stay afloat. Managing liquidity and sustaining through the length of this pandemic will be critical for economic survival in the post-pandemic era.”
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The survey said 42 per cent of the respondents believe that the next six months would be one of the worst phases in terms of new supply additions across major office markets in the country. About 53 per cent of the stakeholders opined leasing activity would remain well below par in the next six months.
Stakeholders’ outlook with regard to future rental appreciation also dipped in Q12020, with 50 per cent of the stakeholders expecting rents to either remain stagnant or slide under the current uncertain economic scenario.
Niranjan Hiranandani, president of NAREDCO and MD, Hiranandani Group, said: “The recovery curve will depend on the fiscal stimulus rolled out by the government. Given the bleak market scenario, all stakeholders concerned are in cautious mode and fighting the war of life versus livelihood. However, a great amount of resilience and adaptability has been demonstrated by consumers and the developers,” he said.