Signs of revival show in Indian
realty’s future sentiments
~Gradual acceptance of structural
reforms infuses optimism in Q4 2017 scores after hitting rock bottom in the
previous quarter~
FICCI-NAREDCO-Knight Frank India
unveils the latest findings of the Real Estate Sentiment Index for Q4 2017
(October–December 2017)
Dr Samantak Das, Chief Economist and National
Director-Research,
Knight Frank India, “At a broad level, sentiments
of the stakeholders from the supply side have been upbeat, largely courtesy the
gradual acceptance of structural reforms like RERA and GST taking shape. While
the current sentiment score has moved in the positive zone after being in the
red in the previous two quarters, the overall future score has also picked up
and reached pre-demonetisation levels. Future sentiments of developers and
financial institutions that had taken a hit in the previous two quarters have
also turned optimistic. However, there has been no major change in the economic
outlook for the coming six months owing to the widening fiscal deficit, higher
inflation expectations and a resultant halt of further softening of interest
rates. On the residential market front launches are expected to be in the mid
and affordable segment largely because of government policies. Optimism in
sales has revived with the industry acceptance of RERA and GST. In the coming
six month, office market will either improve or will hold on to its current
reins but will definitely not get depressed. Going forward we believe that the
real estate sector would witness better transparency and participation from
organised players, which should further boost market sentiments.”
Overall Findings
· After
six months of pessimism in Q2 and Q3 of 2017, positive sentiments have surfaced
in the industry with a current sentiment score of 52. The uptick stems from
better acceptance of structural reforms such as the Real Estate (Regulation and
Development) Act, 2016 (RERA) and Goods and Services Tax (GST) that pulled down
industry sentiments in earlier part of the year.
· The
industry’s future sentiments had hit the rock bottom in Q3 2017. But
adjustments pertaining to the structural reforms have lifted the expectations
with score of 64 in Q4 2017 from 55 in the previous quarter.
NATIONAL
CAPITAL REGION BOUNCES BACK IN THE POSITIVE
· The
North zone was the only region that recorded negative sentiments in Q3 2017.
However, the region has become optimistic following expectation of RERA
becoming a reality in states of Uttar Pradesh and Haryana. In fact,
the newly formed Gurugram and Panchkula benches of RERA have have stated that
the on-going projects in the state will also be brought within the purview of
the regulation, a move expected to drum up confidence levels in the reeling
sector.
FINANCIAL
INSTITUTIONS AND DEVELOPERS OPTMISTIC FOR FUTURE
· Taking
a hit in Q2 and Q3 2017, future sentiments of both the developers and financial
institutions have sharply recovered in the last quarter of 2017. The score for
financial institutions is in fact at an 18 month-high.
REAL ESTATE
INDUSTRY STAYS MUTED ON THE ECONOMIC FRONT
· Expectations
from the economy for the real estate industry stood nearly stagnant in Q4 2017
with only 52% stakeholders showing optimism as compared to 51% in Q3 2017 for
the next six months.
· The
pattern for future sentiments on the funding scenario was also identical.
OPTIMISM
RESURFACES IN THE RESIDENTIAL SECTOR
· Majority
of the stakeholders are hopeful of a spike in residential launches largely in
the affordable housing segment courtesy the government’s impetus in building
affordable homes over the in three back-to-back Union Budgets.
· At
least 52% stakeholders in Q4 2017 are hopeful of sales volumes picking up
indicating a significant surge in sentiments over the previous quarter.
· Despite
a price crack across most residential markets, 56% respondents felt that
residential prices would improve over the next six months.
OFFICE MARKET
HOLDS STEADY
· At
least 54% stakeholders in Q4 2017 were hopeful about increase in new office
supply over the next six months, up from just 38% in the previous quarter. The
level of optimism is highest since Q4 2016
· Similarly,
56% stakeholders in Q4 2017 expected appreciation in office rentals up from
just 38% in Q3 2017.
Download the
report
About FICCI
Established in 1927, FICCI is the largest and oldest apex business
organisation in India. A non-government, not-for-profit organisation, FICCI is
the voice of India’s business and industry. FICCI draws its membership from the
corporate sector, both private and public, including SMEs and MNCs; FICCI
enjoys an indirect membership of over 2,50,000 companies from various regional
chambers of commerce. For further information, please visit www.ficci.in.
About NAREDCO
National Real Estate Development Council (NAREDCO) is an autonomous
self-regulatory body under the aegis of Ministry of Housing and Urban Poverty
Alleviation, Government of India. NAREDCO strives to be the collective force
influencing and shaping the real estate industry. It seeks to be the leading
advocate of developing standards for efficient, effective, and ethical real
estate business practices, valued by all stakeholders of real estate sector and
viewed by them as crucial to their success. NAREDCO works to create and sustain
an environment conducive to the growth of real estate industry in India,
partnering industry and government alike through advisory and consultative
processes. For further information, please visit www.naredco.in.
About Knight Frank
Knight Frank LLP is the leading independent global property consultancy.
Headquartered in London, Knight Frank has more than 14,000 people operating
from 418 offices across 60 countries. The Group advises clients ranging
from individual owners and buyers to major developers, investors and corporate
tenants. For further information about the Company, please visit www.knightfrank.com.
In India, Knight Frank is headquartered in Mumbai and has more than 1,000
experts across Bangalore, Delhi, Pune, Hyderabad, Chennai, Kolkata and
Ahmedabad. Backed by strong research and analytics, our experts offer a
comprehensive range of real estate services across advisory, valuation and
consulting, transactions (residential, commercial, retail, hospitality, land
& capitals), facilities management and project management. For more
information, visit http://www.knightfrank.co.in/
Dayanand G.
Blue Lotus
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(A Comniscient Group Company)
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