Realty developers see market on weak footing

Comes down from 71 on Real Estate Sentiment Index in Q3, 2014 to 59 in Q3, 2015

Property developers and financial institutions are not too optimistic about the prospects of the real estate market, said a survey. According to the Real Estate Sentiment Index for September quarter (Q3) 2015, by Ficci-Knight Frank, the stakeholders' six-month sentiments declined to 59 in Q3 2015 from 71 in Q3 2014. The stakeholders' sentiments for a shorter period also fell from 63 in Q3 2014 to 48 in Q3 2015.

A reading of 50 shows a positive sentiment, while one below that shows  negative.

Samantak Das, national director-research at Knight Frank, said: “Delayed reforms have weakened the present business sentiment, which explains the downward trend in the current score. The supply-side stakeholders (developers and financial institutions) believe that today’s situation is worse, compared to what it was six months ago. The overall declining trend reflects the weakening business confidence.”

These people were particularly pessimistic about the residential sector and do not foresee any significant recovery in six months. "However, the optimism about the future is driven mainly by the office-space segment, which is expected to experience an increase in rentals due to robust easing of volumes and limited supply," he said.

The ongoing festive season was unlikely to revive the residential sector in major cities, the survey found. Supply-side stakeholders said the residential sector was not going to see any upturn in launches and sales in six months, it said.

Nearly 82 per cent of the survey respondents said residential price appreciation was either going to remain stagnant or worsen in six months.

The stakeholders were reasonably optimistic about the office market and 62 per cent of the respondents expected the leasing volume to improve at the back of limited supply. More than 50 per cent of the respondents said office space rentals would strengthen by the end of Q1 2016.