By Shishir Baijal
The year 2021 started on a positive note for the real estate market with the residential and commercial real estate segment on a recovery path.
While the residential market was recording a strong bounce back from Q4 2020, the office segment was also getting back on its feet. Offices started operations across cities, some at full occupancy while others on a rotational or hybrid model, giving employees the flexibility
The onset of the pan-India vaccination drive in March 2021 gave a further boost to the stability notion in the market. Demand continued to grow and business appeared to be moving towards pre-COVID levels.
Just then, the rate of COVID infections in the country began to spike and by mid-March there were talks of this being the onset of a second COVID wave in India. As the month progressed, the severity of the pandemic returned with infection rates at levels significantly higher than last year.
Consequently, mobility curbs and lockdown restrictions became a reality once again. With some states already having such curbs in place, offices have had to return to the work-from-home mode of operation, for the time being.
Uncertainty of intensity and period of this second COVID wave and the ensuing mobility and business restrictions, have rekindled the fears of the pandemic.
The Q1 2021 edition of our Sentiment Index captures the changed industry scenario and the resultant cautiousness amongst stakeholders. With the fear of the second wave of COVID, the Future Sentiment score has fallen to 57 in Q1 2021 from 65 in Q4 2020, even while the Current Sentiment score has inched up marginally.
As we wait for these clouds of panic and uncertainty to wither away, it is hoped that the health hazards of the COVID virus are taken care of at the earliest. Increased vaccination should help arm people against the virus and enable return to normalcy in the economy.
Apart from the pace of vaccination, government decisions on lockdowns / localized restrictions will largely determine the performance of real estate sector in the coming months.
Author is Chairman and Managing Director, Knight Frank India. Excepted from the The Real Estate Sentiment Index Q1 2021, developed jointly by Knight Frank India, the Federation of Indian Chambers of Commerce and Industry (FICCI) and the National Real Estate Development Council (NAREDCO). You can access the complete report HERE.