Demonetisation pulls stakeholder’s sentiments for Q4 to a new low

Knight Frank, a leading independent global property consultancy, has released its Sentiment Index

Here are the findings of the report:

• Demonetisation had a severe impact on the real estate segment with a fall in residential sales in top eight cities by 40 per cent during Q4 2016 compared to Q3 2016, making it the worst performing year since the global financial crisis;
• The current score of 41, which has witnessed a drastic fall below the threshold mark of 50, shows that the stakeholders believe that the current market scenario is the worst in the last three years;
• With the recent government initiative to bring in transparency, efficiency and good governance through the demonetisation move and a focus on making home purchases affordable, the future sentiment score of 62 is a good indicator of the robust optimism portended by the stakeholders for the real estate sector in the coming six months.

Residential sector sentiment striving for stable grounds

• Although the residential sector is going through a difficult phase, the stakeholders are quite optimistic for the future, especially with regards to sales volume;
• 59 per cent of the stakeholders believe that residential sales will improve in the coming six months, as against only 12 per cent that believe to the contrary;
• 45 per cent of the respondents expect prices to remain stagnant while 26 per cent expect a downward pressure on price appreciation, during the same period.

Commercial office space market to remain persistent

• Office markets in key cities have achieved a good base with leasing volumes moving from strength to strength in the past few years, leading to a gradual slowdown in the growth of the sector, as compared to the phenomenal growth observed in the past;
• 88 per cent of the survey respondents believe that office space leasing volume will either remain the same or improve in the next six months, despite the Q4 2016 survey results showing that the level of optimism for the leasing volume has come down compared to Q3 2016.

Zonal sentiment score

• Although the survey participants across the country continue to be optimistic about the future, all the zones (barring South) show a slight de-growth in sentiment in Q4 2016;
• The North zone witnessed the steepest decline even though it was consistently showing improved optimism since the beginning of the year; stakeholders from the Southern zone has remained steadfast regarding their optimism for the real estate sector.