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The 37th edition of the Knight Frank-NAREDCO Real Estate Sentiment Index Q2 2023 (April-June) report highlights the significant improvement in stakeholders' sentiment in the Indian real estate sector. The Current Sentiment Score surged to 63 from the previous quarter's 57, positioning it firmly in the optimistic zone. This rise can be attributed to the Indian economy's continued resilience, even amid a recessionary environment globally. The stakeholders' current outlook is more positive compared to the preceding six months, indicating growing confidence in the real estate market.
During Q2 2023, the Future Sentiment Score also witnessed a positive trend, climbing from 61 in Q1 2023 to 64, firmly placing it in the optimistic territory. This increase can be attributed to India's macroeconomic indicators remaining robust, despite facing some headwinds on certain parameters. The real estate developers' Future Sentiment score rose from 61 in Q1 2023 to 65 in Q2 2023, showing their optimistic outlook for the next six months. The temporary pause in interest rate hikes by the Reserve Bank of India (RBI) played a significant role in bolstering their confidence, as it is expected to support the underlying demand for real estate.
Similarly, the Non-Developer segment, which includes banks, financial institutions, and PE funds, also demonstrated enhanced confidence in the Indian economy, with their Future Sentiment score increasing from 61 in Q1 2023 to 62 in Q2 2023. The RBI's decision to temporarily halt interest rate hikes positively influenced their sentiment.
Moreover, retail inflation, which experienced a temporary spike from 4.25% in May to 4.81% in June 2023, remained within the RBI's acceptable tolerance band of 2-6%. This factor contributed to the positive trend in the Future Sentiment Score, further reinforcing stakeholders' optimism about economic growth, supported by favourable policies.
In conclusion, the Q2 2023 Knight Frank-NAREDCO Real Estate Sentiment Index portrays a strong surge in stakeholders' optimism in the Indian real estate sector. The report attributes this optimism to India's robust economy, temporary interest rate pause, and inflation within the acceptable range. While some contrasting viewpoints might question the sustainability of this positive trend, the current factors appear to support the optimistic outlook for the next six months. The real estate industry, along with the overall economy, will likely benefit from this enhanced sentiment and continue its growth trajectory.
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