It is expected that 2H-FY2014 should record a growth rate of over 5.0%, which is positive in the near-term. Rising Inflation is likely to result in further increase in cost of construction. The increase in cost of finance has lead private financial institutions to switch from equity to debt funding.
Jones Lang LaSalle
Indian economy showed its early signs of growth in recovery in the end of 2013, but headwinds such as threat of inflation, uncertainty in global capital flows and the upcoming 2014 general elections prevail. It is expected that 2H-FY2014 should record a growth rate of over 5.0%, which is positive in the near-term. Rising Inflation is likely to result in further increase in cost of construction. The increase in cost of finance has lead private financial institutions to switch from equity to debt funding.
Office Market Sentiment
The lukewarm absorption of office spaces is likely to remain until 1H2014. However, during 2H-2014, businesses are likely to show greater confidence in terms of investing in their expansion plans leading to increased office space absorption. Rental and capital values are expected to grow in 2014, and yields are likely to compress further.
Residential Real Estate
The present cautious buyer sentiment is likely to continue until the first half of 2014. In 2H2014, post the elections, fence-sitting investors are likely to become active leading to a gradual revival in absorption. Residential real estate capital values will increase in a subdued range of 10-12% y/y pan-India for the whole year. Policy-based efforts are already under way to make the residential real estate sector more transparent will continue in 2014, as well.
Retail Real Estate
The potential resolution of various policy issues and the sustained attractiveness of India’s consuming class will help boost the interest of global retailers in 2014. Close to 900,000 sq.m of additional retail space supply is going to hit the pipeline in 2014. Rental and capital values are likely to remain stable in most cities. Organised Retail Penetration (ORP) to increase in various categories especially in high-margin categories such as clothing, footwear and beauty & personal care in 2014, and consequently will create demand for additional mall space. Investment Outlook – 2014 unlikely to prove pivotal for FDI in retail.
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