For Realty, Something to Cheer
Real estate sentiment index for January-March 2016 rose to 53 from 48 in the previous quarter on the back of Union Budget’s focus on real estate and infrastructure and with the Realty Bill becoming an Act
New Delhi: After five slow quarters, sentiment in the domestic real estate industry is turning positive, according to a report by industry body FICCI and property advisory firm Knight Frank India.
The Real Estate Sentiment Index for the January-March 2016 period has risen to 53 from 48 in the previous quarter after hitting a peak of 63 in the July-September quarter of 2014 after the new government was sworn in at the centre.
The future sentiment index, however, has jumped nine points to 67 in the January-March period from 58 in the previous quarter, indicating a revival in stakeholder sentiment.
According to Das, stakeholders have been optimistic about the office leasing market for some time now. “Residential sector, on the other hand, has restored positive sentiment among the developers and lenders for the first time after four quarters,” he said.
Apart from the Real Estate Regulation Bill becoming an Act, progressively reducing interest rates and an improving funding scenario with the imminent entry of REITs in the market are also expected to help the real estate sector.
According to the report, the northern zone witnessed a substantial recovery in the future sentiment score.
The report, released on Friday, said: “The lower interest rate regime is also a big positive point for the developer fraternity. Additionally, the Reserve Bank has hinted further rate cuts if inflation continues to ease and monsoon turns out to be good.”
However, despite the findings of the report, financial institutions are still cautious. About 68% of those queried for the survey said the funding scenario will become better going forward.
On the residential front, the pressure on unsold inventory has been reducing since the last four quarters due to the limited number of new launches. The report said developers have been focusing on project completions, instilling confidence in buyers.
Stakeholders in the industry are quite optimistic about residential sales — nearly 54% of the respondents said demand will pick up in the coming six months.
About 46% of the respondents said residential launches will improve while 41% said residential price appreciation will become better in the next six months. About 63% of the respondents said new office supply will improve while 73% said leasing volume will rise.