Sentiments in the real estate sector in India were at a record low in the second quarter of 2020, according to a report. The Real Estate Sentiment Index for Q2, prepared by Knight Frank, FICCI and NAREDCO, showed that stakeholders in the sector, however, expect the market scenario to somewhat improve in the next six months.
"The 'current sentiment' score has dropped to its lowest levels at 22 in Q2 2020 on account of the ongoing COVID-19 global pandemic. The strict lockdown implemented in India had brought around 70 per cent of economic activities to a halt in April-May 2020 and this is reflected in the sharp fall in the current sentiment score," said the report.
The survey indicated that the 'Future Sentiment Score' of the stakeholders, though still in the pessimistic scoring zone, has seen improvement at 41 in Q2 2020 against the score of 36 in Q1 2020. This is attributed to an expected improvement in macroeconomic indicators and the adaptation to new business models shaping recovery in the next six months.
A score of 50 represents a 'neutral' view or status quo, a score above 50 demonstrates a 'positive' sentiment and a score below 50 indicates a 'negative' sentiment.
This survey, covering the period April-June 2020, was conducted in the first two weeks of July. It covers key supply-side stakeholders which include developers, private equity funds, banks and non-banking financial companies (NBFCs).
Shishir Baijal, Chairman and Managing Director of Knight Frank India, said: "At this juncture, we expect the lockdown to ease by the advent of the festive season, helping to revive economic activity and propel conversion of the pent-up demand."
Noting that the central bank and the government have announced stimulus measures that have provided much-required reprieve to the economy in these testing times, he said that there is still a need for further demand-boosting measures to improve sentiments in the economy.
"For the real estate sector in particular, there is a need for measures such as additional tax benefits for buying/renting a house, added incentives for affordable housing, easing of credit availability for the sector and a one-time restructuring of developer loans to help the sector recover from this crisis," Baijal said.