Real estate sentiment drops to the lowest level in the wake of COVID-19 pandemic
The nation-wide lockdown due to COVID-19 pandemic is impacting the economy on a large scale. The real estate sector is also feeling the heat of this outbreak, pushing the sentiment to an all-time lowest level in the last quarter of the FY20.
According to a Knight Frank report, both residential and commercial real estate sectors are likely to witness a battering of sorts in terms of launches, sales and prices. Approximately, 42 per cent of the respondents feel that the next couple of quarters are going to be the worst phases in terms of new supply additions. On the other hand, half of the respondents expect the leasing activity to remain below par during this period. Their outlook on future rental appreciation also decreased during the quarter, as 50 per cent of the stakeholders are expecting the rents to remain stagnant or decrease even further. At this juncture, it wouldn’t be wrong to assume that the residential sector is going to find it extremely challenging to launch new projects and complete the ongoing ones.
Talking about the recent developments, Shishir Baijal, CMD, Knight Frank India said, “This crisis has retracted the end-user confidence to its lowest levels ever, which will push any kind of real estate purchase decisions to the distant future.” “The already ailing real estate sector has been crippled with this pandemic, making it imperative for government support to bring it back on track,” he added. Nearly for two consecutive quarters, the sentiment score had remained below 50 mark, before reviving in the December quarter. However, the revival couldn’t last long, as the current sentiment score went down again in the March quarter to settle on 31, as per the reports. Sentiment in western and northern India markets have been impacted badly.
Commenting on the present situation, Niranjan Hiranandani, National President, NAREDCO, said, “There will be a slowdown across the industry post COVID-19 crisis. The industry is facing an acute working capital crisis which is essential to restart the business and keep it moving.” “We have all pinned our hopes on government intervention to salvage the loss created by the crisis with its big fat fiscal stimulus to get the growth trajectory back on track,” he added. The COVID-19 pandemic has halted the operations of the real estate industry at the worst possible time, as the sector was already looking down the barrel towards the end of FY20. It will have all the hopes pinned on the government to roll out friendly policies as soon as normal services resume.