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'Residential property prices set to rise'

July 31, 2014 08:57 IST

'Residential property prices set to rise'

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BS Reporter in New Delhi

Residential property prices are expected to increase in the second half of this year, owing to improved market sentiment due to a stable government at the Centre, according to a study.

Through the past two years, new project launches, as well as sales, have been hit by a slowdown.

“But this will improve in the next six months,” said the Federation of Indian Chambers of Commerce and Industry-Knight Frank Real Estate Sentiment Index for April-June this year.

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Photographs: Rupak De Chowdhuri/Reuters

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“Housing prices are expected to go up during the second half of 2014, with an average increase of five-eight per cent.

“It might go up as much as 15 per cent in certain micromarkets,” said Samantak Das, chief economist and director (research), Knight Frank India.

Knight Frank India Chairman and Managing Director Shishir Baijal said, “The fact that political stability has a perceptible effect on the real estate sector is quite apparent from the optimism shown by stakeholders post the elections.”

The index, based on a survey of various stakeholders, including developers, private equity firms, banking and non-banking financial firms, rose six points to 69, the highest since its inception three quarters ago.

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Photographs: Reuters

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This is the only real estate index released by a private consultancy firm.

Government-owned National Housing Bank, too, brings out a residential index.

While the NHB index, brought out every quarter since July 2007, is based on home loans from banks and financial institutions, the Knight Frank index is based on the sentiment in the sector.

While Knight Frank’s sentiment index is based on the supply side, the one by NHB captures the demand side.

Many primarily relied on NHB data, as these captured buyer activity across major cities, said an expert.

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Photographs: Vivek Prakash/Reuters

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The Knight Frank survey showed the market was significantly optimistic about the residential sector, with 62 per cent of the respondents saying housing prices would rise in the next six months, against 14 per cent in the previous survey.

More than 80 per cent of the respondents felt residential project launches and sales volume would improve in the coming six months.

“With the backdrop of a stable government and high expectations of faster decision-making and positive reforms, respondents have a positive outlook on the residential sector, in terms of sales and launches,” Das said.

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Scores on sentiment rose across regions, with the North being the most upbeat.

“A total of 75 per cent of the respondents anticipate the availability of funds to be better in the next six months,” the survey said.

In the office segment, about 75 per cent of the respondents believe leasing volume will see a surge by the end of 2014.

“However, they expect new office supply to remain under check, which is likely to have an impact on rental appreciation.

“Most respondents feel office space rental growth will strengthen in the coming six months,” the survey said.


Photographs: Vivek Prakash/Reuters
Tags: North

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