Check and Mate on Chessboard of Sentiments

With the present results, investors and stakeholders are looking at a cautious approach while dealing with the real estate sector.

The collective consciousness within the built environment of Indian real estate has, for long, maintained that the very basic nature of the business is such that sentiments often play a larger role than the actual situation on ground. A Knight Frank India and the Federation of Indian Chambers of Commerce and Industry (FICCI) survey finds that the stakeholder sentiments drop for the first time in 5 quarters post the elections and, moving forward, investors would remain cautiously optimistic.

Knight Frank India maintains that though the Indian economic story seems to be heading in the right direction post the change of guard in the government, the five-point drop in the future sentiment index levels definitely indicates a rationalization in stakeholder expectations, regarding the pace at which changes will be brought about in the country. “Increasing illiquidity caused by dipping transaction numbers and delayed economic revival have weighed down the market. Unlike the residential segment, vacancy levels within premium office buildings across prime locations have been consistently reducing with chances of a further drop in the near future,“ maintains Knight Frank India.

Abhay Kumar, CMD of Griha Pravesh Buildteck, says, “High confidence index was not a misplaced conviction, but rather it was more of a desirable situation. High confidence is linked to high expectations which need to be seen in reality to keep that confidence intact. I expect at least three quarters or say entire 2015 would be a year to observe. Just announcement would not help the sentiments anymore,“ says Kumar.

Kishor Patel, CMD, Amit Enterprises Housing, adds, “The stock market has been fluctuating wildly , and decent returns depend on stable growth. There is little point in being too exuberant about economic revival in 2015.GDP growth will remain restrained between 5.5-6 per cent this year, and will come nowhere near the 7-8 per cent which has been prophesied,“ says Pate. Arvind Jain, managing director, Pride Group, says “What we need to watch most closely in 2015 is the rate at which new jobs are being created, and also whether pending infrastructure projects are fast tracked.“ For the real estate sector, the real game changers will be REITs and the Real Estate Regulatory Bill.

QUICK BYTES:
(1.) The office market has been in line with our expectations with uptake happening across all regions.
(2.) Relocation and consolidation of office spaces have been the major drivers of this segment with majority of the contribution coming from the outsourcing industry.
(3.) IT, pharmaceuticals and other export oriented companies continue to do well, so the primary drivers for India’s real estate sector will continue to provide grist to the mill.

Source: Times Property, Jan 24, 2015

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