Realty Sentiment Hits 3-Yr Low In December Quarter On Note Ban

New Delhi: The real estate sentiment fell to a three-year low in the October-December period, indicating pessimism among developers and financial institutions which reeled under the demonetisation pressure, says a report.

However, property consultant Knight Frank India and industry body FICCI said in a joint report that developers, banks and private equity investors are optimistic that market situation would improve in the next six months.

“The demonetisation of high value currency notes of Rs. 1,000 and Rs. 500 was the most sweeping change in recent history, which was a rude awakening for the Indian economy with the real estate sector being at the receiving end of this move,” the Knight Frank-FICCI joint report said.

Hit by demonetisation, total housing sales of the top eight cities fell by 40 per cent in the fourth quarter of 2016 as against the previous three-month period.Realty Sentiment Hits 3-Yr Low In December Quarter On Note Ban: Report

“Consequent to the major disruption during Q4 2016, the current sentiment score has seen a drastic fall to below the threshold mark of 50 to become the worst quarter in the last three years. This implies that stakeholders’ sentiments pertaining to Q4 2016 is pessimistic,” the report said.

The real estate sentiment index, based on a quarterly survey of key supply-side stakeholders, including developers, private equity funds, banks and non-bank financial companies (NBFCs), fell to 41 from 58 in the previous quarter.

“The respondents are of the opinion that the situation during the last quarter of 2016 was significantly worse compared to six months prior, reflecting the short-term adverse impact of demonetisation on the Indian real estate,” the report said.

However, the respondents welcomed the government’s steps to bring transparency into the sector through demonetisation move and the new real estate law as well as the Union Budget’s focus on making home purchases affordable.

“The future sentiment score of 62 is a good indicator of the robust optimism portended by the stakeholders for the real estate sector in the coming six months.

“The demonetisation move did infuse a high degree of uncertainty and confusion in the market but this impact seems to be transient in nature and the mid-to-long term impact is expected to be positive,” the report said.

Although the residential sector is going through a difficult phase, the stakeholders are quite optimistic for the future, especially with regards to sales volume.

“59 per cent of the stakeholders believe that residential sales will improve in the coming six months, as against only 12 per cent that believe to the contrary,” the report said.

“45 per cent of the respondents expect prices to remain stagnant while 26 per cent expect a downward pressure on price appreciation, during the same period,” it added.

Six Indian cities in top 10 realty investment spots in Asia-Pacific

 

Six Indian cities — including Hyderabad, Bengaluru, Pune, Mumbai, Delhi and Chennai — have found place in the top 10 emerging property investment destinations list for the Asia-Pacific.
“Most global investments this year will be made in commercial office assets. Markets in Bengaluru, Chennai, Delhi NCR, Hyderabad, Mumbai and Pune are well placed to outperform other cities from emerging economies in the Asia-Pacific,” said a report titled ‘Betting on Asia Pacific’s next core cities,’ by property consultant Cushman & Wakefield.
Limited investment opportunities in safe haven core markets of Asia-Pacific have prompted investors to turn their attention to secondary and tertiary markets and even to non-core property types, said Cushman & Wakefield.
The consultant used a proprietary tool, strategic location indicator and selected the next core and emerging markets in the region that will offer investors the opportunity to tap into their long-term growth fundamentals, which will become increasingly viable due to sustained reforms.
Siddhart Goel, senior director, research services at Cushman & Wakefield, said: “Asia-Pacific remains a very viable investment target for global capital. After entering in 2005 to 2008 and having learnt many valuable lessons since, global investors are well equipped to take advantage of the potential that Indian real estate markets offer.  The country is firmly on track to become an economic powerhouse, with strengthening GDP (gross domestic product), better business environment and investor-friendly policies”.real estate, property
Goel said that the developments have resulted in net absorption across the top eight Indian cities to remain in the range of 32-35 million square feet in the last three years even as the share of the IT-BPM sector in commercial office leasing has steadily gone down from 65-70 per cent to 52-55 per cent during this period. “Within APAC, India is expected to continue contributing highly to the total office demand. Consequently, global investors are increasing their capital outlays substantially as they are confident about the long-term prospects of the Indian economy in an environment of increasing transparency and accountability backed by policy reforms such as RERA, REITS, GST, Benami Transactions Act, etc,” he said.
What’s ahead in APAC?
Cushman said according to its ‘The Atlas Summary 2017’ report, real estate investment volume in the Asia-Pacific is expected to hit $611 billion this year. A total investment value of close to $136 billion in the region in the first quarter of this year, a record quarter high, and is a good indicator of health of investment in real estate in the Asia Pacific region. Pending any unforeseen circumstances in the months ahead, a positive momentum is expected to continue making a banner year for real estate investments in Asia Pacific.