The Indian real estate sector is navigating a cooling-off period as market sentiments waver due to global geopolitical tensions and macroeconomic uncertainties.
Despite these challenges, industry insiders remain optimistic about a robust recovery in the coming months, buoyed by a stable economic environment and continued demand for housing. The Knight Frank-NAREDCO Real Estate Sentiment Index Q2 2024 report reveals a moderated sentiment score of 65, down from a record 72 in the first quarter. Similarly, the future sentiment index dropped to 65 from 73, signalling a cautious outlook among industry players. However, despite this dip, the sentiment remains in the positive zone, indicating a sustained belief in the sector’s long-term prospects.
A closer examination of the data suggests that the real estate sector is undergoing a natural period of adjustment after an extended phase of robust growth. This cooling-off period is seen as a temporary phenomenon, with stakeholders confident in the sector’s resilience and potential for future expansion. According to developers, the slowdown is largely driven by market speculation around upcoming elections and budget announcements. One notable trend is the continued optimism regarding new project launches. Real estate developers across India are actively expanding into new markets, reflecting their bullish outlook.
The BCD Group, for instance, highlighted that while the recent sentiment index shows a slight dip, the confidence in launching new housing projects remains strong. This sentiment is further supported by data from ICRA, which projects a 12 per cent year-on-year increase in launches across the top seven cities, amounting to 767 million square feet. Moreover, housing sales have demonstrated resilience, particularly in tier-2 cities. According to Anarock, while sales in the top seven cities saw an 8 per cent decline In Q2 after a strong Q1, the overall market remains stable, with an 11 per cent increase in sales year-on-year to 207,896 units in 2023-24. Prices have also seen significant growth, with some cities witnessing up to a 90 per cent rise.
Industry experts agree that the underlying fundamentals of the real estate market remain strong. Factors such as increasing urbanisation, rising disposable incomes, and supportive government policies for affordable housing are expected to drive demand. Additionally, the growing preference for homeownership among working professionals is likely to sustain the sector’s momentum in the years to come.
