Fes­tive sea­son does lit­tle to boost realty sec­tor

High de­mand, low sup­ply has boosted the of­fice space mar­ket, but res­i­den­tial sec­tor sce­nario still looks bleak

HT Estates - - FRONT PAGE - HT Es­tates Cor­re­spon­dent

While no sig­nif­i­cant re­cov­ery is ex­pected in res­i­den­tial real es­tate in the next six months, there is much op­ti­mism about the of­fice space mar­ket which has been ex­pe­ri­enc­ing in­creased rentals due to ro­bust leas­ing vol­umes and lim­ited sup­ply, ac­cord­ing to the FICCI-Knight Frank In­dia Real Es­tate Sen­ti­ment In­dex re­port for the third quar­ter 2015.

S t a ke h o l d e r s e n t i m e n t de­clined to 59% in the third quar­ter of 2015 from 71% in the third quar­ter of 2014. Al­though the fu­ture score at 59 falls in the pos­i­tive ter­ri­tory, the over- all de­clin­ing trend re­flects the weak­en­ing busi­ness con­fi­dence, says the re­port.

“De­layed re­forms have weak­ened the present busi­ness sen­ti­ment, which ex­plains the down­ward trend in the cur­rent score. The sup­ply-side stake­hold­ers (de­vel­op­ers and fi­nan­cial in­sti­tu­tions) be­lieve that to­day’s sit­u­a­tion is worse, com­pared to what it was six months ago,” says Dr Sa­man­tak Das, chief econ­o­mist and na­tional di­rec­tor, re­search, Knight Frank In­dia.

This is the sec­ond quar­ter in a row wherein the cur­rent sen­ti­ment score is be­low the pos­i­tive mark. The stake­hold­ers be­lieve to­day’s sit­u­a­tion to be worse com­pared to what it was six months ago.

How­ever, the re­spon­dents are of the opin­ion that the real es­tate mar­ket will im­prove in the com­ing six months.

The on-go­ing fes­tive sea­son is un­likely to re­vive the res­i­den­tial sec­tor in the ma­jor cities of In­dia. Ma­jor­ity of the sup­ply side stake­hold­ers are of the opin­ion that the res­i­den­tial sec­tor is not go­ing to ex­pe­ri­ence any up­turn in sales and new launches in the com­ing six months.

Nearly 82% of the sur­vey re­spon­dents f eel that res­i­den­tial price ap­pre­ci­a­tion is ei­ther go­ing to re­main the same or worsen in the com­ing six months.

Stake­hold­ers are rea­son­ably op­ti­mistic about the of­fice mar­ket and 62% of the re­spon­dents ex­pect the leas­ing vol­ume to im­prove at the back of lim­ited sup­ply. More than 50% of the re­spon­dents feel that of­fice space rentals will strengthen by the end of the first quar­ter 2016, the re­port added.

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