The Real Estate Sector Is Still Optimistic: Report
The score represents the current outlook of stakeholders in relation to the previous six months. The current attitude score increased from the previous quarter’s 57 to 63 in the positive zone, according to the 37th edition of the Real Estate attitude Index Q2 2023 (April-June) study. This is because the Indian economy has remained resilient despite a global economic downturn. The score represents the current outlook of stakeholders in relation to the previous six months.
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The future sentiment score increased from 61 in Q1 2023 to 64 in Q2 2023, which is in the optimistic range, as India’s macroeconomic indicators were steady despite challenges on some measures.
Non-developers and developers both move closer to the optimistic zone
The developer’s future sentiment score went from 61 in the first quarter of 2023 to 65 in the second. Real estate developers are hopeful about the following six months despite a brief halt in interest rate increases by the Reserve Bank of India (RBI), as the underlying demand for real estate is still strong.
The non-developer segment’s future sentiment score climbed from 61 in Q1 2023 to 62 in Q2 2023 (this segment comprises banks, financial institutions, & PE funds). Institutional investors, who had previously kept a close eye on the market, now expressed greater trust in the Indian economy. They were positively impacted by the RBI’s hiatus in the cycle of interest rate increases.
India’s economy has solidly established itself as one of the world’s largest and fastest-growing economies, which has considerably impacted stakeholders’ attitudes in Q2 2023 amid tumultuous global developments. Despite experiencing significant inflation in developed markets, the Indian economy showed resiliency and recovered, giving stakeholders hope for the stability of the domestic economic environment and the success of the real estate sector over the coming six months. Retail inflation temporarily increased from 4.25% in May to 4.81% in June 2023, but it still falls within the RBI’s range of tolerable tolerance of 2-6%. The policy climate is still supportive of economic growth, which is why the future sentiment score maintained its upward trend.
Robust housing market
The residential market outlook for Q2 2023 shows increased optimism as stakeholders maintain their confidence in all factors, including sales, launches, and price for the following six months. The proportion of stakeholders that anticipate growth in the residential sector has grown this quarter across the board compared to the previous quarter. Particularly since the previous year, stakeholder opinions on residential launches and price have only become better. In Q2 2023, 55% of survey participants predicted that home sales will rise over the next six months, compared to 48% who held the same view. As the residential sector is on a solid foundation underpinned by governmental initiatives and the rise seen in 2022, the break in the cycle of interest rate hikes has heightened stakeholder attitudes about the sustenance of the current demand momentum in the next six months.
62% of the stakeholders in Q2 2023 believed that residential launches will improve during the following six months. 56% of the stakeholders had the same opinion in Q1 2023. The residential market’s consistent sales helped stakeholders maintain a positive perspective for the introduction of new launches. As a result of the consistent demand for residential property, 64% of survey participants in Q2 2023 anticipate an increase in residential prices over the ensuing six months. In contrast, 61% of survey participants in Q1 2023 shared same opinion.
| Q2 2023 | Residential Sales | The Residential Launches | Residential Prices |
| Increase | 55% | 62% | 64% |
| Same | 25% | 22% | 32% |
| Decrease | 20% | 16% | 4% |
Office market
In Q2 2023, 50% of poll participants predicted that office leasing will rise during the following six months. 50% of respondents in the prior quarter had the same opinion. Despite the prospect of a recession in certain significant developed economies, stakeholders were bullish about the growth story of India and its resilience to continue in office leasing due to strong demand from firms with a focus on India, flex/co-working, and the growth of global capability centres there.
47% of survey participants in Q2 2023 anticipate an improvement in office supply during the following six months. A similar viewpoint was expressed by 43% of poll participants in the preceding quarter. While 38% of survey respondents believed the same thing last quarter, 45% of respondents in Q2 2023 anticipate an increase in office rent.
| Q2 2023 | Office Leasing | New Office Supply | Office Rents |
| Increase | 50% | 47% | 45% |
| Same | 37% | 38% | 48% |
| Decrease | 13% | 15% | 7% |
Zoneal results
All of the zones’ future sentiment scores increased in Q2 2023, with the exception of the South Zone, where stakeholders are still upbeat but apprehensive about the prognosis for the real estate industry in the coming six months.
Despite the South Zone’s score moderating, all scores remained comfortably above 50 in the optimistic zone, indicating increased confidence in these markets’ success over the following six months.
| Zonal | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 |
| East | 57 | 66 | 60 | 57 | 62 | 55 |
| West | 57 | 59 | 58 | 57 | 55 | 64 |
| North | 65 | 66 | 62 | 50 | 61 | 70 |
| South | 66 | 66 | 60 | 57 | 62 | 55 |
Financial scenario
According to the results of our study, stakeholder opinions on the general economic momentum front have only become better over the past year with each passing quarter. 55% of survey participants in Q2 2023 reported higher hopes for this metric compared to 52% in Q1 2023. With the recovery that followed the epidemic, India’s steadfast position as the fastest-growing economy in a gloomy global context became more obvious. RBI’s prompt policy intervention to sustain growth increased stakeholder confidence that the economy has emerged from the pandemic’s shadow.
Since India has a very strong appeal for luring investments from foreign funds, stakeholder emotions towards funding availability also improved as a result of developments in global geopolitics. In Q2 2023, 49% of stakeholders predicted that the real estate sector would have more finance available during the following six months.
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