The real estate sector’s future sentiment score in Q3 2017 (55) has reached its lowest point over the past 39 months, indicating a significant decline in optimism pertaining to the sector’s future performance. This indicates that the true impact of demonetisation and structural reforms such as RERA and GST have finally sunk into the industry, said a report by FICCI-Naredco-Knight Frank India today.
According to the report, the score was also drastically lower than the future sentiment score of 61 in the demonetisation-hit quarter of Q4 2016 when the industry was bullish about the future of the sector. Also, while the future score has not yet entered the pessimistic zone, no revival is expected over the next six months.
Hit by the prolonged crisis in the National Capital Region (NCR), one of the largest real estate contributors in the northern zone, the north region recorded the lowest future sentiment score of 41. The future sentiment score in the western zone (53) has been on a constant decline and lowest over the past 39 months in Q3 2017.
Talking about the findings of the report, Shishir Baijal, Chairman and Managing Director, Knight Frank India, said, “Business sentiments in the recent history of real estate in India have hit the lowest levels of optimism. While sentiments are largely transient in nature, the prevalent mood in the industry reflects that it has finally come to terms with the short-term adverse impacts of the structural reforms that became a reality over the past 12-odd months.”
There is also an evident slowdown in the economy with a steady decline in business performances and the dwindling of capital expenditure to worrisome levels. “Going forward I feel that the next 12 to 18 months are likely to be the ‘under observation’ period for the real estate sector. Industry stakeholders should spend the period in reorienting businesses in line with the new order,” he said.