RERA boosts real estate sector sentiments
Demand in the residential real estate market to pick up
the price of vacant plots range between ₹ 45,000 to ₹ 75,000 per sq yard. A major determining factor of the price is location, she added. Despite commanding premium prices, Sainik Farms is woefully lacking in essential services. Water and sewage lines have not been laid and most of the area was without proper water and sewerage system.
The Real Estate Regulation Bill becoming an Act has boosted sentiments in the real estate market as the sector is expected to become much more transparent and organised, which in turn will benefit all stakeholders, including homebuyers, says a report.
“After a lull of five quarters, the overall sentiment has experienced a sharp uptick at the back of the Budget’s focus on real estate and infrastructure. Additionally, the Real Estate Regulation Bill becoming an Act has boosted sentiments further since the sector is expected to become much more transparent and organised, which in turn will benefit all the stakeholders,” says Dr Samantak Das, chief economist and national director, Research, Knight FrankIndia.
The FICCI-Knight Frank Real Estate Sentiment Index that offers an overview of India’s residential and commercial real estate sector for the first quarter of 2016, says that there is considerable improvement in sentiments for the residential sector.
The residential sector, on the other hand, has restored positive sentiment amongst the developers and lenders for the first time after four quarters.
The pressure on unsold inventory has been reducing since the last four quarters due to the limited number of new launches. Developers have been focusing on project completions, instilling confidence in buyers, it says.
The benefits provided to homebuyers in Budget 2016 are also expected to push demand further. Stakeholders are optimistic about residential sales – nearly 54% of the respondents believed that the demand will pick up in the coming six months, it says.
As for the commercial market, stakeholders are quite optimistic about the office market, especially in terms of leasing volumes and rental appreciation. Nearly 73% of the respondents expect the leasing volume to improve in the coming six months.
In view of the limited office supply and leasing volumes firming up, stakeholders are of the opinion that the office space rental appreciation rate will be better in the next six months, it says.
The report also found that the north zone witnessed substantial recovery in the future sentiment score in the first quarter of this year. The positive score indicated that sentiments have strengthened and
The analysis of the stakeholders stakeholder expectations from the residential and office sectors for December 2016 versus the actual market statistics gives interesting insights into the real estate market.
The survey conducted for the second quarter last year also gave positive results for both the residential and commercial segments for the subsequent six months. While the ground reality for the six months ending December 2015 post the the second quarter of 2015 survey was consistent with the expectations in the case of office space leasing volumes and rental appreciation, new completions had reduced.
In the residential sector, stakeholder expectations were positive for new launches; however, in reality, the launches had shrunk further.
Similarly, the expectations in the case of the residential sales volume were slightly muted: stakeholders believed that the sales would remain at par with the second quarter in 2015 levels. However, home sales plummeted further. Expectations from the residential price appreciation were fairly rationalised in the second quarter of last year, when the survey respondents indicated that the rate of the residential price appreciation would remain steady, which is what happened.
The urban development ministry has circulated a proposal for regularising unauthorised colonies, including Sainik Farms.
Improved sentiments in the real estate sector are likely to revive the market in the long run