Knight Frank Sentiment Index Survey Q1 2019
by Priya Jadhav
Mumbai, May, 2019:The Indian Real Estate sector has expressed optimism in the first
quarter of 2019 as per Knight Frank’s Q1 2019 Sentiment Index
Survey.Real Estate (Regulation and
Development) Act, 2016 (RERA), exemption of inventory tax from one to
two years in the Annual Union Budget of 2019 and the Good and Services
Tax (GST) rate rationalisation,have together
contributed to boosting the current stakeholder sentiments.
The current sentiment score has inched 5 points upwards from the
preceding quarter and remains in the positive in the first quarter of the new
calendar year. The market
sentiments that had waned during 2017 with the various structural changes in
the real estate sector have bounced back and have been steadily improving there
since.
· The future sentiment
score maintains its positive spell and has moved up to 63 points in Q1 2019. Stakeholders are of the opinion that
the transparency brought in by the enormous structural reforms has
fundamentally changed the dynamics of the real estate sector for the better. The stakeholders are positive of the
outcome of governments’ efforts
to ease the burden of developers by acknowledging the slowdown in the sector. This has boosted the stakeholder. sentiments for the coming six months.
The rationalisation of
the GST rate to 5% for
under-construction
flats and 1% for the
affordable housing sector has also played a significant part in bolstering real
estate sentiments for the coming six months.
· With steps in the positive direction by the
government and the banking regulator, majority of stakeholders have expressed
optimism and expect policy interventions to positively translate into new
residential launches and sales in the coming six months.
· While 87% of stakeholders
have opined that, the sector will see new launches in the coming six months, a
substantial 85% of them have
opined that the filtering in the sector with respect to the organised and
unorganised developers will positively translate into demand in the coming six
months.
·
Stakeholders believe that the reduction in the
repo rate by 25 basis points is a well awaited stimulus to boost sales and ease
liquidity for the real estate sector. It
needs to be noted that this recent reduction in policy rates is the second
consecutive rate cut by the banking regulator and the repo rate now stands at 6%.
·
Riding on the positive sentiments, the future
sentiments regards the price appreciation have also showed some positivity in
Q1 2019. Improving from
the preceding quarter, majority of the stakeholders have opined that the
residential prices will either remain in the current range or may even inch
upwards in the coming six months.
Shishir Baijal, Chairman and Managing
Director, Knight Frank India says, “The sentiment index for residential has
shown optimism which can be easily interpreted to understand that development
companies are looking towards a revival of the sector. This growth in demand is expected despite
the impending elections results, demonstrating confidence of the supply side
that the structural changes introduced in the last few years will start to show
their results in the year forward.”
ZONAL SENTIMENT SCORE
Score>50: Optimism; Score=50: Same/Neutral; Score<50: Pessimism
The future sentiment
score for north has regained optimisms and is in the positive side in Q1 2019
after going in the red in the preceding quarter.
The stakeholders opine that tough the market is
reeling under inventory pressures and low buyer confidence, what brings respite
to the matter is that now all developers have aligned their business with RERA
and GST which is leading to the rapid consolidation and filtering of the market
in Gurugram in Haryana and Noida and Greater Noida in Uttar Pradesh which form
the major portion of the real estate chunk of the national capital region.
· Stakeholders from south, east and westzones have
always remained in the optimistic zone for the past many quarters and continue
their momentum in the first quarter of 2019 as well.
STAKEHOLDER
SENTIMENT SCORE
Score>50:Optimism; Score=50: Same/Neutral; Score<50: Pessimism
· The
sentiment score of the developers regards the real estate scenario for the
coming six months has significantly inched upwards in Q1 2019. Over the past quarter the real
estate sector has witnessed changes like the implementation of the new GST
structure, exemption from paying notional rent and the incentivised push to
affordable housing that has helped in positively impacting the market
sentiments.
· Coupled with this, the stakeholders see the
reduced repo as a positive move by the banking regulator, which will provide
the developers with the much-needed
funds to execute theirprojects and also give a boost to sales by attracting the
fence sitting buyers.
· Sentiments of the financial institutions for the
real estate scenario for the coming six months have remained somewhat steady in
Q1 2019 and are in line with the preceding quarters.
The real estate sentiment index is developed jointly by Knight Frank (India), the Federation of Indian Chambers of
Commerce and Industry (FICCI) and National Real Estate
Development Council (NARDECO). The objective is to capture the perceptions and expectations of
industry leaders in order to judge the sentiment of the real estate market.
About Knight Frank:Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight
Frank has more than 18,170 people operating from over 523 offices across 60
markets. The Group advises
clients ranging from individual owners and buyers to major developers,
investors and corporate tenants. For further
information about the Company, please visit www.knightfrank.com.
In India, Knight Frank is headquartered in Mumbai and has more than
1,000 experts across Bangalore, Delhi, Pune, Hyderabad, Chennai, Kolkata and
Ahmedabad. Backed by strong
research and analytics, our experts offer a comprehensive range of real estate
services across advisory, valuation and consulting, transactions (residential, commercial, retail,
hospitality, land & capitals), facilities
management and project management. For more
information, visit www.knightfrank.co.in
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