Knight Frank-NAREDCO First Quarter Housing Sentiment Index Survey

The results of the Knight Frank-Naredco Real Estate Sentiment Index Q1 2022 survey reveal that with high vaccination coverage and an improving business environment, the outlook for the Indian office market has improved significantly. As COVID-19 restrictions were eased nationwide in March 2022, 72% of respondents believe office leasing will maintain a healthy growth curve over the next six months. In fact, in the first quarter of 2022, stakeholders’ outlook for office rents also improved compared to the fourth quarter of 2021. While 55% of respondents believed that office rents are expected to increase over the next six months , supported by strong demand trends. In terms of new office supply, 67% of survey respondents believe that new office supply will increase over the next six months.

Following higher prospects in commercial space, Rohan Lifescapes recently secured a lucrative deal worth Rs 202 crore with Polycab India Ltd, for commercial space nestled in The Ruby, the tallest commercial tower located in the first Dadar, which is already occupied by renowned multinationals.

According to Rohan’s Lifescapes, as the economy unblocks and offices resume working offline, there’s a lot of buzz in the commercial real estate market. This deal alone brought in over Rs 202 crore resulting in a stamp duty of Rs 10 crore to the Treasury. The space in question is a 55,383.65 square foot expanse, spanning the 23rd and 24th floors, on Tulsi Pipe Road. The office features sea views and envious cityscapes as well as spacious parking spaces. Harresh Mehta, CMD of Rohan Lifescapes is very bullish on commercial real estate. He believes the real estate sector in South and Central Mumbai is recovering. This leads directly to the rapid recovery of commercial real estate space post covid. Additionally, as employees return to offices after a long virtual stint, the real estate segment expects a positive impact on all spears.

While Knight Frank and Naredco’s flagship quarterly survey noted that current sentiment hit a new high of 68 – indicating that most stakeholders have seen positive developments in their businesses over the past 6 months, including including the period of the investigation. Importantly, Future Sentiment’s recorded score of 75 was at an all-time high. This score indicates developer/investor expectations for the next six months from the time of the survey. The flagship survey is in its 32nd edition. The current sentiment score fell from 65 in the fourth quarter of 2021 to 68 in the first quarter of 2022, as the last six months remained positive for growth for most real estate players.

The reason for this positive trend is that the Indian economy went through the third wave while facing the uncertainty of war in Europe, the dynamics of the real estate sector remained unchanged, especially in the residential segment. Commercial real estate segments also showed growth following the pandemic hiatus. While sentiment has been positive for the previous two quarters, this score is one of the highest in the survey’s history. Shishir Baijal, Chairman and Managing Director of Knight Frank India, said: “Growth in the residential market has been impressive, lifting sentiment across the sector. As most companies are starting to call their staff back to work, the demand for office space has also been steadily increasing. The dynamism of stakeholders’ opinion on the sector is reflected positively in the current and future sentiment scores. However, geopolitical tensions affecting crude oil prices are leading to higher inflation in the Indian market, which may impact end-user demand. The scenario is further complicated with supply chain disruptions, rising input costs and an impending rise in interest rates, all of which need to be watched carefully in the near future. While Rajan Bandelkar, Chairman of NAREDCO India and Director of Raunak Group, said, “Amid the geopolitical tensions and economic downturn seen in recent months, the real estate sector in India remained impacted during the first quarter. Due to global uncertainties – a rise in the cost of raw materials such as steel, cement, etc. – is a concern for the sector, however, these concerns are likely to subside over the coming quarters. A gradual increase in sales in all regions and the opening of offices across the country, as well as the current interest of occupants in renting office space, will contribute significantly to the expected strong recovery and boost consumer sentiment. As the current survey shows, the sentiment score has increased in the first three months.However, the situation regarding mat supply chains raw materials could be prolonged in the short term. Therefore, the development strategy should focus on establishing uninterrupted supply chains and faster project deliveries. Such a strategy will help the sector achieve growth. There is already a positive outlook for Indian real estate over the next six months as the country’s changing cityscape will continue to fuel demand for housing and office space. over the next six months due to strong demand for home purchases. 80% of survey respondents expect home sales to increase over the next six months.

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Posted: Wednesday April 20th 2022, 10:41 PM IST

Jose C. Birney