Real estate market sentiment decline to 2016 note ban levels

Chennai: Despite the slew of measures by the government and the Reserve Bank of India (RBI) to boost liquidity and revive demand, the current market sentiments in the real estate market have fallen close to demonetization levels and the future market sentiments are at all-time low levels.

As per the latest survey by Knight Frank — FICCI — NAREDCO —  ‘Real Estate Sentiment Index’ the current sentiments of the real estate stakeholders in India has plummeted to 42 in the July-September quarter of 2019. In recent times such a level of ‘pessimism’ was found during the uncertainty period before 2014 election and the demonetisation quarter of 2016. A score of over 50 signifies ‘optimism’ in sentiments, a score of 50 ‘neutral’ and a score below 50 ‘pessimism’.

The stakeholders continue to be pessimistic due to the overall economic slowdown and the slump in domestic consumption. Credit crunch due to NBFC crisis and GDP growth of 5 per cent affected the September quarter sentiments. The slashing of corporate tax rate, liquidity support to HFCs and NBFCs and the creation of a stressed asset fund have not infuse confidence in the market, finds the survey.

The future sentiment or the outlook for the next six months was at an all-time low level of 49. The future sentiment has turned ‘pessimistic’ for the first time since the inception of the survey in Q4 2013.

Stakeholders see no immediate solution to the sector plagued with defaults and weak demand. Many real estate projects are stuck in the past one year due to lack of funds. The fear of slowdown in the economy further weakening the demand has marred the outlook for the coming six months.

‘Government measures are mostly focused on affordable housing segment, leaving out the vast majority of non-affordable from the announced benefits. These measures have not helped infuse confidence in the stakeholders, as the real challenge lies in demand side story, where end users are unwilling to make home purchases owing to lack of financial confidence. The supply-side sops will not be enough till the time demand is revived by putting money in the hands of the consumer and his confidence is restored,’ said Shishir Baijal, Chairman and Managing Director of Knight Frank India.