Sentiment In Real Estate Sector At All-Time Low: Knight Frank-Ficci Survey

A survey of all real estate stakeholders jointly conducted by independent valuer Knight Frank and the Federation of Indian Chambers of Commerce and Industry (FICCI) showed that the current sentiment of real estate stakeholders in the country has fallen to an all-time low. First Quarter (January – March) 2020.

Shishir Baijal, president and managing director of Knight Frank India, said, “The epidemic has created an unprecedented situation affecting global markets and societies. There is already a severe shortage of liquidity due to the complete deadlock, which has come in most economies. Even though the government and the Reserve Bank of India have provided some incentive measures, further support may be needed to help the real estate sector and to stay ahead during the crisis of the economy. Managing and maintaining liquidity through the length of this epidemic will be critical to economic survival in the epidemic era. “

The survey found that the current and future sentiment scores reached the lowest level in Q1 2020 in view of the ongoing Kovid-19 outbreak. The sentiment score was revived in Q4 2019 after being in pessimistic territory (below 50 points) for two successive quarters. The revival was short-lived however, as the current perception score has fallen to 31 in Q1 2020.

The uncertainty caused by the pandemic has adversely affected the subsequent six months.

Dr. Niranjan Hiranandani, National President, Nardako and Founder and MD, Hiranandani Group, said, “The current lockdown has brought the industry to a standstill and the recovery curve will depend on the treasury rolled by government machinery. In view of the bleak market scenario, all concerned stakeholders are in cautious mode and are fighting a life versus livelihood battle. However, a large amount of flexibility and adaptability has been demonstrated by consumers and developers. This crisis has certainly re-channelized people to their thoughts and behavior, which will lead the industry to structural trends. The greatest learning is a change in the perception of one’s home owner that embeds a deep sense of safety and security in a period of crisis. It will be the next driving force to generate long term sustainable housing demand of the segment. “

“The industry will be recession during the post COVID-19 crisis. The industry is facing an acute working capital crisis which is necessary to restart the business and keep it running. Dr. Hiranandani said that the government has defrayed our expectations to compensate for the losses caused by the crisis with massive fiscal stimulus.

The mood of stakeholders in relation to the overall economy and the real estate sector was in a pessimistic zone due to the credit squeeze and overall economic slowdown in the second and third quarter of 2019. The real estate market gained confidence in the last quarter of 2019, with measures announced by the government to revive the sector. The creation of a Rs 25,000 crore stressed asset fund (AIF) was a welcome step in this direction to provide last mile funding to stalled affordable housing projects. However, the Kovid-19 outbreak has affected stakeholder sentiments, the survey said.

According to the survey, future sentiment scores have fallen sharply to 36 in Q1 2020 after bouncing back in Q4 2019.

The lockdown will turn into a side effect of stalled construction, delay in delivery of the project, delay in repayment of loans and lending to banks and uncertainty in employment and demand cuts due to pay cuts. All these factors have influenced the future sentiments of the stakeholders.

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