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Residential Properties

Indian Real Estate News : Jaipur
Residential property sales and prices may rise
Source: Livemint Jul 30, 2014
More funding options and focus on infrastructure buoy developer and financial institutions' sentiment

Sentiment seems to have turned positive in the real estate market. The most recent Ficci-Knight Frank Real Estate Sentiment Index of April-June 2014 underscores this. The index, based on a survey base of 150 industry respondents across India, increased six points to a level of 69 in the second quarter of 2014.

The score was only 50 in the fourth quarter of 2013, and 63 in the first quarter of 2014. (A score of 50 indicates 'neutral' sentiment; anything above and below this is optimistic or pessimistic.)

Sentiments are upbeat mostly owing to expectations of faster decision making and positive reforms. While residential launches and sales will see a good run, prices are expected to go up during the second half of 2014. New office supply will, however, remain under check, which will help office rentals to strengthen in the coming months.

The quarterly survey is based on responses from developers and financial institutions such as private equity funds, and banking and non-banking financial companies. Efficient approvals and easier funding options are also a major reason behind the optimism. As many as 75% of the respondents expect the availability of funds to be better in the next six months.

The tax clarity announced for real estate investment trusts (Reits) in the recent budget, and the expected finalization of the related regulations by market regulator Securities and Exchange Board of India (Sebi) may provide further support to the sector.

In terms of regions, the mood is most upbeat for the next few months in North India with a score of 72. The western region scored the least at 67, while the eastern and southern regions scored 70 and 71, respectively.

Across the board

In the survey, more than 80% respondents felt that residential project launches as well as sales volumes will improve in the coming six months. The bullish undertone is also reflected in the expected price appreciation in the residential market.

Similarly, office space leasing volume is expected to outstrip upcoming supply. More than three-fourth of the survey respondents believe that leasing will increase by the end of this year. However, they expect new office supply to remain low, which will have an impact on rental appreciation. Office space rental growth is expected to grow in the coming six months.

It remains to be seen whether sentiments continue to remain upbeat in the coming quarters.

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