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Last Updated : | Source: Moneycontrol.com

Residential prices may drop further to attract fence-sitters: Report

The report is based on a survey covering over 150 stakeholders of the Indian real estate sector, including leaders from the development and financial side.

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The uncertainty over the overall economic scenario and the upcoming general elections in India have failed to infuse  confidence among home buyers or investors. Also, while there is general optimism around new launches, especially affordable housing, prices are likely to remain stagnant or may even drop further to attract the fence-sitting buyer in the coming six months, as per a new report.

Majority of the stakeholders have expressed optimism regarding the new residential launches coming up in the next six months. Nearly 78 percent of the stakeholders have opined that the sector will see new launches in the coming six months, mainly on the back of the mid and affordable segment. Insights suggest that with the clarity brought about by the structural reforms, notable developers are keen to bring fresh supply in the market. Majority of stakeholders believe that residential sales will improve in the coming six months, according to the Real Estate Sentiment Index.

The future sentiments regarding price appreciation have remained stagnant in the fourth quarter of 2018 as well. About 74 percent of the stakeholders have opined that the prices will either remain stagnant or may even drop further to attract the fence-sitting buyer in the coming six months.

The Real Estate Sentiment Index that captures the perceptions and expectations of industry leaders has been jointly brought out by Knight Frank India in association with National Real Estate Development Council (NAREDCO) and the Federation of Indian Chambers of Commerce and Industry (FICCI).

The report is based on a survey covering over 150 stakeholders of the Indian real estate sector, including leaders from the development and financial side.

The survey notes that there is general optimism around the launches, with the hope of a gradual upward incline. The stakeholders have opined that the buyers are still in the wait and watch mode which will dampen sales. Future sentiments for price appreciation, however, remained marginally down, indicating that the sector does not expect any price rise in the coming six months.

“The real estate sector has shown signs of controlled optimism in the recent survey. Based on our survey, the respondents expect real estate sector to witness gradual growth in the coming six months. The future sentiments for both major asset classes, i.e. residential and offices, are expected to be moderately positive," said Shishir Baijal, Chairman and Managing Director, Knight Frank, India.

Stakeholder sentiments in the coming six months have taken a slight dip. They are holding their ground and are not as bullish over the outcome of various structural reforms in the real estate sector. The uncertainty over the overall economic scenario and the upcoming general elections in India have failed to infuse any confidence in the stakeholders, says the report.

On the other hand, the future sentiment score of the west has moved up significantly in the first quarter of 2019 compared to the same period in 2018. The way RERA has been implemented in the west zone particularly in Maharashtra, has infused confidence in the stakeholders and it is evident in the future score for the region.

However, the future sentiment score for north has gone in the red in the fourth quarter of 2018. This dip in sentiment for the coming six months stems from the lack of buyer confidence in the market. Accumulating inventory, stagnant prices and sluggish sales and default by reputed developers have contributed to the further dip in the NCR future sentiment score.

Though the future sentiment score of South, has dipped in the fourth quarter of 2018, it still remains in the positive, and we see that stakeholders are positive for the next six months, it said.
First Published on Feb 6, 2019 04:54 pm
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