Realty survey finds situation ‘pessimistic’

Indian real estate stakeholders have downgraded the current period outlook for the ongoing six months to ‘Pessimistic,’ indicating no improvement in the level of on-ground activities for the sector. This is the principal finding of the latest survey, ‘Real Estate Sentiment Index Q2 2019’ by Knight Frank–Ficci–NAREDCO.

In sharp contrast to the preceding quarters, the overall current sentiment for the real estate sector has been rated at 47 points for the period April-June 2019, a Ficci press release said. “The overall slowdown in the economy, coupled with factors like the NBFC crisis, developer defaults and bankruptcies, have slackened the sentiments of the sector, especially for the residential segment. The situation is further compounded by factors like the ongoing liquidity crisis and a diminutive demand scenario. The outlook for the next six months was scored at 52, just above the neutral line. Stakeholders, while showing moderate optimism, are still cautious in their expectations on account of an overall economic slowdown that is impacting the real estate sector.”

The sentiments, however, reversed for the office sector where the stakeholders’ outlook remains positive and both leasing and rents which are expected to be on an upward swing in the coming six months.

Weak demand, inventory overhang, developer defaults coupled with the worsening of the NBFC crisis has dried up funding for the sector, which in turn has increased the borrowing cost and impacted finances for the already strained sector. In the current scenario, stakeholders meaning to do good business are also finding it tough to convince lenders, the release said.

The sentiment score of the developers and the financial institutions regards the real estate scenario for the coming six months has significantly plummeted in Q2 2019. The worsening NBFC crisis has hit the real estate sector in full force resulting in dried up credit line to the already cash-strapped developers.

Financial institutions have moved into the ‘pessimistic’ zone at 48 while developers remain just over neutral at 52 mostly guided by the growth in affordable housing.

As many as 74 per cent of the stakeholders have opined that the economic situation will be the same or may even worsen in the coming six months showing low confidence on market situation to be able to elevate the current situation.