The current sentiments of the real estate stakeholders in the country have dropped to an all-time low in the first quarter (January – March) 2020, according to the Knight Frank - FICCI - NAREDCO Real Estate Sentiment Index Q1 2020 Survey .
Shishir Baijal, chairman and managing director of Knight Frank India said, “The pandemic has created an unprecedented condition which is impacting global markets and societies. There is already a severe shortage of liquidity due to the complete standstill that most economies have come to. Even while the government and the Reserve Bank of India have provided some stimulus measures, further support may be required to help the real estate sector and for the economy to stay afloat during the crisis. Managing liquidity and sustaining through the length of this pandemic will be critical for economic survival in the post-pandemic era.”
The survey found that the current and future sentiment score has nosedived to the lowest levels in Q1 2020 in the wake of the ongoing Covid-19 outbreak.
The sentiment score had revived in the Q4 2019 after being in the pessimistic zone (below 50 mark) for two consecutive quarters. The revival was however short-lived, as the current sentiment score has dropped to 31 in Q1 2020.
The mood of the stakeholders as regards to the overall economy and the real estate sector had been in the pessimistic zone in the second and third quarter of 2019 due to credit squeeze and overall economic slowdown. With the slew of measures announced by the government to revive the sector, the last quarter of 2019 infused confidence in the real estate market. The creation of a stressed asset fund (AIF) of Rs 250000 crore to provide last mile funding to staled affordable housing projects was a welcome step in this direction. However, the Covid-19 outbreak has marred the stakeholder’s sentiments, it said.
According to the survey, the future sentiment score has sharply fallen to 36 in Q1 2020 after having bounced back in Q4 2019.
Looming uncertainty due to the pandemic has adversely impacted the stakeholder sentiments for the coming six months as well, it said.
The lockdown will translate into a vicious sequence of stalled construction, delays in project deliveries, delays in loan repayments and debt servicing to banks and an overall slump in demand due to uncertainties in employment and salary cuts. All these factors have marred the future sentiment score of stakeholders, it added.