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
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.
Stakeholder sentiment 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.