India’s real estate sector growth outlook firms up: Report

Highlights

There is rising confidence in the growth of India’s real estate sector over the next six months, according to a Knight Frank-NAREDCO survey released on Friday.

Mumbai: There is rising confidence in the growth of India’s real estate sector over the next six months, according to a Knight Frank-NAREDCO survey released on Friday.

In the residential market, optimism prevails as 62 per cent of respondents anticipate a rise in residential prices supported by consistent demand, mainly from the luxury segment with ticket size Rs 10 million and above. As many as 40 per cent of respondents foresee increased sales, and 38 per cent expect market stability. Similarly, the office market outlook is buoyant, with strong confidence in key parameters such as leasing, supply, and rents, underscoring stakeholder optimism for robust performance in the coming months, the report states.

The Knight Frank-NAREDCO Real Estate Sentiment Index captures the perceptions of supply-side stakeholders and financial institutions regarding the real estate sector, economic climate, and funding availability. A score of 50 indicates a neutral outlook; scores above 50 reflect positive sentiment, while those below 50 suggest a negative outlook.

The Developer Future Sentiment Score rose from 61 in Q2 2024 to 65 in Q3 2024 indicating renewed optimism. Developers remain positive, adapting to shifting market dynamics and leveraging ongoing sales momentum, the report said.

Meanwhile, the Non-Developer Future Sentiment Score (comprising banks, financial institutions, and PE funds) maintains the status quo at 68 through Q2 and Q3 2024, reflecting their confidence in well-structured real estate projects and the sector's long-term growth prospects, the report observed.

Knight Frank India CMD Shishir Baijal said, "The Q3 2024 Real Estate Sentiment Index highlights the strength of India’s real estate sector. While the Current Sentiment Score moderated slightly, the Future Sentiment Score improved, reflecting growing confidence among stakeholders. Strong demand in high-end residential sales and stable leasing in commercial spaces underscore the sector's steady performance.”

The office market outlook for Q3 2024 reflects strong confidence, with stakeholders optimistic about the sector's long-term potential. According to the survey, 76 per cent of respondents expect office leasing to improve, driven by positive corporate sentiment and a sustained recovery in demand. Additionally, 47 per cent predict an increase in office supply, highlighting stability and continued growth in the sector.

This confidence extends to rental performance, as 73 per cent of respondents anticipate a rise in office rents, fuelled by increasing demand for high-quality office spaces. These findings underscore the resilience and growth trajectory of India’s office market, bolstered by a favourable economic environment and evolving corporate requirements.

Based on the findings of the survey 46 per cent of respondents expect an improvement in the economic scenario, reflecting softened optimism about India's economic resilience and potential growth while 47 per cent anticipate an increase in funding availability, demonstrating moderated confidence when compared to 51 per cent in the previous quarter.