Covid-19 Crisis: Real Estate Sentiment Hits All-time Low In March Quarter

The sentiment in the real estate industry touched all time low in March quarter due to Covid-10 crisis, says new survey.

According to Knight Frank-Ficci-Naredco Real Estate Sentiment Index Q1 2020 Survey, the sentiment (of developers and lenders) which showed signs of revival during the October-December quarter of 2019, has suffered a huge setback because of the Covid-19 crisis with both current and future sentiment index falling to an all-time low in pessimistic zone.

More than 60 per cent of the stakeholders (developers and lenders) have opined that the current Covid-19 situation will adversely impact residential new launches, sales and prices in the next six months.

The residential sector which already had concerns of weak demand will find it difficult to launch new projects and complete the ongoing ones due to construction halts and labour shortage, Knight Frank said.

The slew of measures announced by the government like the fund for last-mile funding of affordable housing, rationalisation of GST rates, liquidity support to HFCs and NBFCs were desirable steps to revive the sector. However, in the current situation, further stimulus measures will be required to revive the sentiments and invigorate demand, it added.

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Shishir Baijal, chairman and managing director of Knight Frank India said, “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 RBI 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 said 42 per cent of the respondents believe that the next six months will be one of the worst phases in terms of new supply additions across the major office markets in the country. About 53 per cent of the stakeholders opined that leasing activity will remain well below par in the next six months.

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Stakeholders’ outlook with regard to future rental appreciation also dipped in Q1 2020 with 50 per cent of the stakeholders expecting rents to either remain stagnant or slide under the current uncertain economic scenario.

Niranjan Hiranandani, national president, NAREDCO and MD, Hiranandani Group, said, “The current lockdown has brought the industry to a standstill position and the recovery curve will depend on the fiscal stimulus rolled out by the government machinery. Given the bleak market scenario, all concerned stakeholders are in cautious mode and fighting the war of life versus livelihood. However, a great amount of resilience and adaptability has been demonstrated by consumers and the developers,” he said.