Real Estate Sentiment Turns Positive in First Quarter of 2016, Future Optimistic Report

India’s real estate sector has witnessed the positive sentiment in the beginning of  2016, the Real Estate Sentiment Index has jumped in the first quarter of 2016 after the five slow quarters, said a report prepared by industry body FICCI and Knight Frank India.

The Real Estate Sentiment Index has climbed to 53 in January-March 2016 from 48 in the previous quarter of Q4 (October-December) 2015. The sentiment was at the speak at 63 in July-September quarter of 2014, since then it has been declining continuously in every quarter.

“After a lull of five quarters, the overall sentiment has experienced a sharp up tick at the back of the Union Budget’s focus on real estate and infrastructure. Additionally, the Real Estate (Regulation and Development) Bill becoming (became) an Act has boosted the sentiment further since the sector is expected to become much more transparent and organised which in turn will benefit all the stakeholders,” said  Dr Samantak Das, Chief Economist & National Director, Research, Knight Frank India.

Real Estate (Regulation and Development) Bill, 2016 became an Act from 1st May.

The future sentiment of real estate sector has also jumped to 67 during the January-March quarter, the future sentiment in previous the quarter was 58 in Q4 2015.

Overall, there is a considerable improvement in the sentiments for the residential sector. The number of respondents with a positive outlook for the sector has gone up in Q1 2016. The pressure on unsold inventory has been reducing since the last four quarters due to the limited number of new launches, said the report.

Developers have been focussing on project completions, instilling confidence in buyers.

The benefits provided to buyers in the Union Budget 2016 are also expected to push demand further. Stakeholders are quite optimistic about residential sales, nearly 54% of the respondents believe that the demand will pick up in the coming six months.

The stakeholders have been optimistic about the Office market for quite some time now and the same trend has been reflected in this survey as well. Residential sector, on the other hand, has restored positive sentiment amongst the developers and lenders for the first time after four quarters, said Mr. Das.

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 firming leasing volumes, stakeholders are of the opinion that the office space rental appreciation rate will be better in the next six months.

The north zone witnessed a substantial recovery in the future sentiment score in Q1 2016, said the report.

As sentiment has risen in the first quarter and future sentiment of both residential and office market is expected to grow, the sentiment will positively impact on the construction equipment industry if more construction related works take place in the country.

As per the PTI report, Union Minister Mr. Nitin Gadkari said recently that the government is planning to invest Rs 25 lakh crore over the next 3 years for the construction of roads, railway and shipping infra. The investment indicates very strong sign for the construction equipment industry.

Source: Information has been obtained from FICCI and Knight Frank India report, PTI

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