Indian Real Estate Market’s Q3, 2015 Analysis – Tripti Rai

Bengaluru, January 13, 2016: India’s real estate market has gone through various experiments since May 2014, when Modi was elected as Prime Minister. With the promise of ‘ Acche Din’, the nationsaw a new hype in various sectors, and real estate was one of them.

The Modi government took initiatives to increase property investments and dealings. Various steps were taken with the hope to revive thereal estate sector–100 percentFDI in real estate, with more a more liberal exit policy, the repo rate was lowered to make the NRI investment stand on the same ground as any national investment.

We also saw concepts like smart cities and house for allbeing conceived and implemented.

These efforts and the plans formulated to make them a possibility were enough to change the outlook of India’s real estate market.

But with the nation looking towardsthe last quarter, has the real estate outlook changed? Are the reluctant property buyers now ready to take the step?

Let us find out –

Despite of the various measures taken by the government to check the real estate scenario of India and encourage property investments, India continues to stare intothe downfall of property market.The price movement along all the metros seems to be stuck on what it was in the previous quarter, the same effect holds true even after the surge in thenationwidesupply movement.

Price and Supply Movements in Q3, 2015*

While cities like Bangalore and Chennai witnessed zero percent price appreciation in the third quarter of 2015, all the other metro cities, Mumbai, Delhi, Kolkata, Hyderabad, and Pune moved to one percent change in the price value, over the last quarter.

On the supply side, developers of the seven metropolitan cities concentrated on the finishing of their projectsand chose to stay away from launching new projects. The trend that saw only Bangalore with lower supply percent than any other metro was said to be resulting from increasing unsold inventory that led to an automatic rise in liquidity constraints.

While Bangalore was the only city that got left behind, all the other metro cities profited from developers’ one aim focus to sell the piled on unsold units.

Supporting the near nothing change in price movements, the sentiments calculated from the comprehensive survey undertaken by banks, NBFCs, developers, and private equity funds remain negative and was seen take the downward slope.

Real Estate Sentiment Report, Q3, 2015**

The present sentiment score of 48 signs at the dire belief that the market scenario now is much worse than what it was six months ago. Residential markets’ under performance and delay in the implementation of reformshas only worsened the confidence of stakeholders.

While this is the story of present quarter, the hope that real estate market would refine is keeping the future score up to 59 points . The commercial sector is expected to be the tool that would give Indian real estate market the ultimate push.

Zone wise, the key stakeholders were most hopeful for the growth in southern market followed by West, East, and North respectively. While all of them remained optimistic, the score was lower than the points seen in the last quarter, Q2 of 2015.

Even after the trends suggested declining price movementin Q3 as opposed to Q2, 2015 , stakeholders were and continues to be optimistic that the economic situation will get better. This strong optimism is also backed by their unwavering belief that the office market will grow in terms of leasing volume, rental appreciation, and new office supplies. However,their concern aboutthe funding scenario, which they believe will worsen, keeps them from getting into the real estate market in the coming quarter, Q4.

Delayed reforms and ever increasing real estate pricesseems to be the two main reasons that are keeping the sentiments from changing. What has seeped from stakeholders to the ‘aamaadmi’seems to give a worrisome picture for the future of Indian real estate.

Tripti Rai writes for 99acres.com. She keeps her readers informed about latest developments in Real estate India. When found not writing or reading, she is busy thinking about the next book or writing inspiration.

Corporate Comm India(CCI Newswire)