Track2Realty: Knight Frank India in association with the Federation of Indian Chambers of Commerce & Industry (FICCI) in its fourth set of findings of its flagship report – the Real Estate Sentiment Index for Q3 2014 (July – September) finds that sentiments are still riding high, though investors remain cautiously optimistic. The report captures the sentiments of the supply side stakeholders on the current real estate market conditions and gives a view into the near future.
Key Takeaways
· The Union Budget 2014-15 has laid considerable emphasis on the real estate sector and this has infused a positive sentiment for the future
· Although the current sentiment score merely breached the 50 mark in Q2 2014 (April – June), results for this quarter (July – September) has risen to 63 which is attributable to the stakeholders’ positive perception regarding the economy, residential sales and price appreciation compared to six months back
· The future sentiment score of the developers has surged to 73 in Q3 2014, up by 4 points from the previous quarter
A comparison of the last four quarters – Q4 2013 (October to December); Q1 2014 (Jan to March); Q2 2014 (April – June); Q3 2014 (July – September)
The above findings of the FICCI – Knight Frank Sentiment index specifically highlight the sentiments of the supply side stakeholders which may not have a direct impact on actual transactions.
Following is a Knight Frank India view on the present market scenario with regard to the residential and office markets.
In case of residential sector, the festive season has not brought in the expected cheer to the real estate sector, with markets reporting “not so-encouraging” sales over the past two weeks. Unlike the boom years, stakeholders this year had resisted the temptation to launch new projects in the season, focusing instead on reducing the inventory that has piled up over the past few quarters.
Markets like NCR and Mumbai have not even seen regular investments coming their way and seem to be waiting for the new government to execute reforms which may help improve the situation. Keeping in view the current situation we expect at least 6-8 months before actual transactions begin picking up. Though stakeholders are hopeful that this will change before the said time period, but if the current signs in the market are anything to go by, it’s still a long way ahead.
The office market on other hand, performance has been in line with our expectations with uptake happening across all regions. Relocation and consolidation of office spaces has been the major drivers of this segment with majority of the contribution coming from the outsourcing industry. Unlike the residential segment, vacancy levels within premium office buildings across prime locations have been constantly reducing with chances of a further drop in the near future.
As per the first round of survey for the FICCI-Knight Frank sentiment index during October – December 2013 sentiments were slightly negative for the office market until June 2014, in reality this sector has performed better, both in terms of new office completion and leasing volumes during the same period.
It remains to be seen if the sentiments continue to show a positive outlook in the coming quarters as we begin to experience actual economic revival and the implementation of policies.
