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The Outlook for the Indian Real Estate Market in 2022 and Beyond is Optimistic

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  • 13th Aug 2022
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The Outlook for the Indian Real Estate Market in 2022 and Beyond is Optimistic

Indian real estate - despite comfortably staying in the positive zone, the current sentiment index score has decreased mostly owing to the anticipated effect of the two consecutive repo rate rises in May and June 2022.

According to the most recent edition of the 'Knight Frank-NAREDCO Real Estate Sentiment Index Q2 2022,' the current sentiment score has decreased from the previous quarter's all-time high of 68 to 62 in Q2 2022, despite a fast shifting economic environment. Despite comfortably staying in the positive zone, the current sentiment index score has decreased mostly owing to the anticipated effect of the two consecutive repo rate rises in May and June 2022. The future sentiment score, which represents stakeholder emotions for the next six months for the real estate industry, has also decreased from its record high of 75 in Q1 2022 to 62 in Q2 2022, as rising iflation and a declining rupee against the dollar cast a shadow over the sector.

The present and prospective mood ratings remained hopeful despite the fall. On addition, players in the real estate supply side continue to monitor the three global risks: economic upheaval in the United States, the Russia-Ukraine dispute, and economic downturn in Europe.

Interestingly, the analysis finds that although the future sentiment score of developers grew throughout the quarter, the future sentiment score of non-developer parties (including banks, financial institutions, and PE funds) decreased. The individual developer future sentiment score grew from 56 in Q1 2022 to 61 in Q2 2022. Despite mounting cost constraints and more costly house loans, developers are optimistic due to a robust trend in homeowner demand. The future mood score for non-developers has decreased from 67 in Q1 2022 to 64 in Q2 2022. There is a sense of normality as a result of widespread immunizations and a lack of limitations on transportation, so institutional investors' prognosis for the next six months is optimistic yet cautious.

Over the last eight to ten quarters, it has been shown without a reasonable doubt that there is a substantial latent demand in the residential sector, which, when satisfied, would result in a substantial increase in home prices.

Supported by the correct pricing and incentives, sales will result. In recent quarters, this has provided the once-struggling industry with positive impetus. While the residential market confronts a number of geopolitical challenges, rising inflation resulting in increased reporate, and higher prices, demand remains robust, resulting in an optimistic forecast for the Indian real estate sector.



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