Sentiments Rising in Real Estate Sector with Signs of Revival

By : 360 Realtors

19 February, 2020

After a period of liquidity crisis and an increasing inventory of unsold properties, Indian real estate has finally shown some signs of revival. According to a report by Knight Frank India, the sentiments of the stakeholders in this sector rose to 53 in the fourth quarter of 2019, which is evidently a positive sign. While a score above 50 is ‘optimistic’, one below 50 is termed as ‘pessimistic’ and 50 is considered to be ‘neutral’.

For the last three years, the Real Estate sector has been suffering from a crisis. Apart from the lack of demand and the excess inventory, the NBFC crisis has resulted in a drying up of fronts. Many projects have stalled due to a lack of funds. This has indirectly led to an increase in the interest on loans, adversely impacting the real estate sector. Lack of financing and a decline in the purchasing power among the property investors have caused the demand for homes to fall.

However, the government has already started taking steps to revive the Indian real estate. A funding window of INR 25,000 crore has been announced, apart from the rationalization of the GST rates, etc. for the revival of stalled projects. It is also expected that the government will bring in more targeted reforms to help the real estate industry revive with a flourishing market.

Although the sentiments of the stakeholders are in the optimistic zone, they are being cautious with their outlook. Most of them have opined that although the situation won’t worsen further in the coming months, the sector would stay in the same level. About 79% of the stakeholders have stated that they expect the property prices to either fall or remain the same for the next few months.

In the residential segment, around 74% stakeholders have expressed that sales may improve or remain the same, but wouldn’t decline anymore in the next six months. These are evidently signs of recovery of the ailing sector. Moreover, more developers are now focusing on the affordable housing sector, which is doing relatively better compared to the luxury homes. The demand for affordable housing is higher too, so this is expected to help balance the sector. However, the government’s steps are essential for the quick recovery of this industry.