Despite budget provisions, residential housing market will see sales growth: Knight Frank

New Delhi [India], August 17 : The residential market shows a positive outlook, with 51 per cent of stakeholders predicting higher sales over the next six months. Despite this optimism, stakeholders remain cautious and attentive to upcoming budget impacts and other uncertainties, according to the Knight Frank report.
However, a notable 24 per cent expect stability, while 25 per cent predict a potential decrease, reflecting a balanced yet cautious sentiment. The outlook for residential launches is also positive, with 61 per cent expecting an increase, suggesting continued demand. A more tempered view is held by 20 per cent of respondents who expect stability, and 19 per cent foresee a decrease in launches.
The Indian real estate sector continues to reflect a positive outlook for the near future, though with a more cautious approach.
In terms of pricing, 63 per cent of stakeholders expect a rise, but 36 per cent anticipate stable prices, and a very small minority predict a decline.
G Hari Babu, National President, National Real Estate Development Council (NAREDCO), said, "The residential and office markets continue to show notable activity, signalling ongoing growth and opportunity. Developers and other key stakeholders, including banks and financial institutions, are maintaining a positive outlook."
He added, "This suggests that while there may be short-term challenges, the sector is well-positioned to adapt and thrive. The continued optimism and activity in the market highlight the sector's ability to sustain its momentum and drive forward, amidst changing conditions."
The office leasing market shows signs of strong recovery, with 63 per cent of respondents predicting an increase in leasing activity, driven by positive business sentiments and economic revival. However, 24 per cent expect stability, and 13 per cent foresee a decline.
New office supply also remains a point of interest, with 47 per cent expecting an increase, while 29 per cent anticipate stability, and 24 per cent forecast a decrease. Furthermore, 67 per cent of stakeholders expect office rents to rise, signaling confidence in the market's ongoing growth, even as 27 per cent anticipate stable rents and 7 per cent expect a decrease.
The Future Sentiment Score, which measures stakeholders' outlook over the next six months, saw adjustments across various regions. The North Zone score slightly decreased from 65 in Q1 2024 to 63 in Q2 2024, though it remains firmly optimistic.
The South Zone witnessed a more significant drop from 76 to 65, signaling a moderated outlook. In the East Zone, the score fell from 77 to 65, largely influenced by the discontinuation of the 2 per cent stamp duty cut. The West Zone also saw moderation, with the score dipping from 73 to 66, though it too remains optimistic.
The overall Developer Future Sentiment Score decreased from 72 to 61, reflecting a more guarded approach. Developers, while cautious, continue to remain optimistic due to strong sales since early 2023.
On the other hand, the Non-Developer Future Sentiment Score, which includes financial institutions and PE funds, also moderated from 73 to 68. This shift indicates stakeholders' careful consideration of macroeconomic concerns.
Optimism in India's broader economic scenario remains strong, with 59 per cent of respondents expecting an improvement, reflecting confidence in the country's economic resilience.
However, 24 per cent foresee stability, and 17 per cent predict a decline, underscoring global economic uncertainties. Meanwhile, 51 per cent of respondents anticipate increased funding availability for real estate investments, reflecting continued confidence in the financial sector's support for the real estate market.
Shishir Baijal, Chairman and Managing Director of Knight Frank India Pvt Ltd, noted, "As we transition through 2024, a host of factors are playing out globally. The global economic landscape shows resilience despite ongoing challenges. Inflation rates are gradually aligning with central bank targets, enabling a more supportive monetary policy. India, benefiting from stable post-election conditions, remains a strong growth beacon."
He added, "Domestic consumption is robust, supported by consumer loans, though there are some signs of growth moderation. Food inflationary pressures persist, but are converging overall towards price stability targets. With a projected GDP growth rate of 7.2 per cent for FY 2025, India's outlook remains positive. An effective monetary policy by the Reserve Bank of India has helped sustain growth with price stability, positioning India as one of the fastest-growing large economies globally."
The Current Sentiment Score, which reflects stakeholders' view of the market compared to six months ago, moderated from a decadal high of 72 in Q1 2024 to 65 in Q2 2024.
This suggests a more measured outlook as stakeholders navigate evolving global economic conditions. Despite the dip, the score remains indicative of optimism.
Looking forward, the Future Sentiment Index also adjusted from 73 in Q1 2024 to 65 in Q2 2024, signaling a positive yet more conservative outlook for the near term. While macroeconomic uncertainties may dampen enthusiasm, stakeholders continue to show confidence in the sector's resilience and adaptability.