Real estate sentiment index at year’s high in Q4 2020

The Knight Frank-FICCI-Naredco real estate sentiment index hit its highest mark in 2020 during the October-December period, rising for the second consecutive quarter in a row after Q1 and Q2 were a washout due to the Covid-19-induced disruptions. It entered the optimistic zone at 54 points in Q4 2020, a significant jump of 14 points over the previous quarter.

The future sentiment score rose to 65 points in Q4 2020 from 52 points in Q3 2020. Geographically, the western part of the country saw the sharpest jump in future sentiment index. For stakeholders, both developers and non-developers (banks, NBFCs, PE funds, etc) recorded an improvement in Future Sentiment score in Q4 2020.

“The current sentiment score jumped considerably to 54 in Q4 2020 from 40 in Q3 2020, entering the optimistic zone for the first time in 2020,” the report said. For comparison sake, a score of more than 50 signifies ‘optimism’ in sentiments, while 50 means the sentiment is ‘same’ or ‘neutral’, and a score below 50 signifies ‘pessimism’.

The October-December 2020 quarter continued to see an improvement in the business momentum. Office space leasing grew as global players began acting on their pending and anticipated lease plans encouraged by the news of multiple potential Covid-19 vaccines. Traction in the residential segment continued in Q4 2020 on the back of festive discounts, pent-up demand and low home loan interest rates.

On the macroeconomic front, 82% of the respondents opined that the economy would grow further in the coming six months as opposed to 57% of respondents with the same view in Q3 2020. Similarly, the share of respondents with the opinion that economic health will worsen in the next six months went down substantially to 7% in Q4 2020 from 31% in Q3 2020.

In terms of credit availability, 87% of the Q4 2020 survey respondents believed that the funding scenario would either improve or continue to remain the same over the next six months.

Further, 77% of the Q4 2020 respondents thought that residential sales would increase over the next six months, up from 66% in Q3 2020. With regards to the office market, 60% of the Q4 2020 survey respondents, up from 47% in Q3 2020, believed that office leasing activity would increase over the next six months.

The future sentiment score has climbed up to 65 in Q4 2020 from 52 in Q3 2020, mirroring the strong recovery expectations prevalent in the market. Stirring demand and festivities of Q4 2020 gave a strong fillip not just to the real estate sector but also to the economy at large.