2nd wave of Covid-19 badly hits future Sentiment for Indian Real Estate

Ramesh Agrawal (LL.B , CA) | Last updated: 02 May 2021

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The second wave of COVID-19 has significantly dampened future sentiment within India's real estate sector, with projections indicating a negative impact for at least a year. While the current sentiment saw a slight improvement due to earlier commercial and residential momentum, the surge in cases since March 2021 has led to a substantial decrease in demand for residential properties. The outlook for office occupancy and space also appears weakened for the next six months due to restrictions and potential lockdowns.

The 2nd wave of the COVID-19 has lead to a drop in the future sentiments index in the real estate sector for a minimum of 1 year.

Due to uncertainties & spread of the 2nd wave of Covid-19, the "Future Sentiment Score" declined from 65 in Quarter 4 of 2020 to 57 in Quarter 1 of 2021 as per a survey conducted by Knight Frank-FICCI-NAREDCO.

The 'Current Sentiment Score' recorded a marginal improvement, from 54 in Quarter 4 of 2020 to 57 in Quarter 1 of 2021. As per Knight Frank India, this improvement has been mainly due to the healthy momentum in the Commercial & Residential Real Estate segments during the period October 2020 to February 2021.

Indian Real Estate Sentiment Hit by Covid-19 s 2nd Wave

Due to the increase in COVID-19 cases since March 2021, the search for residential launches and sales has decreased substantially.

The share of respondents that expect the residential market to grow or remain steady in the next 6 Months is exceeding 80%, across parameters of launches, sales and prices.

Office Occupancy levels have been adversely affected due to the 2nd wave of COVID-19 & mobility restrictions & also possible lockdowns in some cities. Due to this office space outlook has been weakened for at least the next 6 months.

During the last few quarters, the real estate industry had seen a strong bounce-back, which has kept the future sentiment of stakeholders within the positive zone but with this 2nd wave, the scenario seems to be very tough.

FAQ :

The second wave of COVID-19 has caused a drop in the future sentiment index for the Indian real estate sector, with expectations of a negative impact for at least one year.

The 'Future Sentiment Score' declined from 65 in Q4 2020 to 57 in Q1 2021.

No, the 'Current Sentiment Score' saw a marginal improvement, rising from 54 in Q4 2020 to 57 in Q1 2021.

The improvement in current sentiment was mainly due to the healthy momentum observed in the Commercial and Residential Real Estate segments between October 2020 and February 2021.

Since March 2021, the increase in COVID-19 cases has led to a substantial decrease in searches for residential launches and sales.

Office occupancy levels have been adversely affected by the second wave, mobility restrictions, and potential lockdowns, weakening the office space outlook for at least the next six months.