According to a report by FICCI – Knight Frank India, as a result of the demonetization drive by Prime Minister Narendra Modi which had the severe impact on the real estate industry, the stakeholder’s sentiments in Q4 2016, dipped to the worst level in three years.
The current sentiment score has seen a drastic fall below the threshold mark of 50, thereby registering as the worst score in the last three years. In the report, chief economist and national director, research, Knight Frank India, Samantak Das said
“Consequent to the major disruption during Q4 2016, the current sentiment score has seen a drastic fall to below the mark of 50 to become the worst quarter in the last three years. This implies that the stakeholders’ sentiments pertaining to Q4 2016 are pessimistic. The respondents are of the opinion that the situation during the last quarter of 2016 was significantly worse compared to earlier six months, reflecting the short-term adverse impact of demonetization of Indian real estate. The demonetization move did infuse a high degree of uncertainty and confusion in the market but this impact seems to be transient in nature and the mid-to-long term impact is expected to be positive.”
Findings of the Report
One of the major findings of the report is that there was a dip in residential sales in top eight cities of India by 40 percent in Q4 compared to Q3, 2016. Since the global financial crisis, this is the worst performing year.
The sentiment score is 41 due to which stakeholders believe that the current market scenario is worst. However, with the present government focusing on making home purchases affordable, sentiment score after the next six months is expected to soar and stand at 62.
Most of the stakeholders are optimistic that the situation is likely to get better in the future. 59% of them believe that it will be better while 12% oppose it. While 26% of the stakeholders expect a downward pressure on price appreciation, 45% feel that it will remain the same.
It is learned that north zone witnessed the steepest decline and stakeholders from south zone have remained steadfast.
The office space leasing volume is believed to increase in the forthcoming years.
“The impending landscape of transparency, efficiency and good governance strived by the demonetization move, the Union Budget’s focus on making home purchases affordable and the probable implementation of RERA have installed a sense of positivity among the respondents for the next six months,” Samantak added.