Economic slowdown may hit residential sales in next six months

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Updated: August 13, 2019 10:51:23 PM

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 AprilJune 2019, it said.

Economic slowdown, residential sales, digital KYC, application program interface, fintech companies, sandbox processThe future sentiment score has taken a hit in Q2 2019 with the score dropping down to 52 compared to 63 in Q1 2019.

 

The overall slowdown in the economy, coupled with factors like the NBFC crisis, developer defaults and bankruptcies, have slackened the sentiments of the sector, which may result a decline in residential sales in the next six months, a recent survey said. According to a recent report by Knight FrankFICCI Naredco, 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.

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 AprilJune 2019, it said. The future sentiment score has taken a hit in Q2 2019 with the score dropping down to 52 compared to 63 in Q1 2019.

“Though remaining in the positive zone, the dip in the score indicates that the stakeholders are exercising caution to give a thumbs up to the sector in the coming six months,” Knight Frank India chairman and managing director Shishir Baijal said. He said, the pessimistic outlook of stakeholders of real estate have only reiterated the current negative growth conditions that the sector is staring into.

“The economic slowdown, which has moved well beyond real estate into segments like auto, the fast-moving consumer goods and durables (FMCG and FMCD), is firmly establishing a slowdown in buyer sentiments, indicating further delay in end-user purchase decision,” Baijal said. The real estate sector in specific has been witnessing a tough sales environment which is only expected to continue.

“The government has started to take remedial measures to boost overall liquidity in the market to help increase sales volumes across industries. We hope that comprehensive steps, like those taken to boost affordable housing, will be taken by the government in the near future to uplift the entire real estate segment,” he added. As per the report, a majority 69 per cent of the stakeholders have maintained that the residential sales will remain tepid or may even go down further in the coming six months.

Sentiments regarding residential price appreciation also look lackluster with 75 per cent of the stakeholders opining that the residential prices will continue to remain muted. “Taking cognizance of the slowdown in the sector, the RBI has cut the repo rate by 110 basis points in the last four reviews, however reduction in the domestic spending and investment activity will loom large given the flat income growth,” the report said.

The outlook for the office sector remained positive as 83 per cent of respondents says that office supply, as well as demand, will see positive movement. Stakeholders also gave a positive outlook towards rental growth for the next six months.

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