India’s real estate market is largely emotionally driven and a lot depends on the sentiments persisting in the market. Despite the weak macro-economic environment in 2013 due to high inflation, rising interest rates, stagnant growth and rising fiscal deficit, the real estate sector saw stable demand during the year after recovering from low in the period during 2011-2012 with build-up of sufficient inventory.
To understand the expectations and sentiments of property buyers and real estate investors for this year,a real estate portal recently conducted the survey titled Real Estate: Consumer Outlook 2014.
The survey received overwhelming response from potential property buyers and investors who are planning to buy property in 2014. The majority responded that they expect there will be a significant impact on the real estate demand and buying post Lok Sabha elections in May-June.
Participants indicated their preference for investing in real estate in 2014. A significant number of participants are ready to invest or buy property this year. While comparing this result with As per a real estate survey 2013, there was a significant increase in the number of people ready to invest or buy property this year. This indicates a positive outlook for the real estate sector in 2014.
As for the preferred destinations for Property Investment, a majority opted for Tier 1 cities but, interestingly, Tier II cities also saw an increasing demand.
Further, the survey also indicated the property-type preference of the participants. New trends are emerging in the industry and the choice of people clearly indicated this.
Other than real estate, participants also considered various other options for investment such as fixed deposit, gold, stocks and Mutual Funds. There was a clear preference for fixed deposit as people considered it a safe option.
The survey, further, highlighted the budget preference of buyers clearly indicating that there is a huge demand for affordable housing.
Interestingly, buyers feel that the general elections will definitely impact the real estate sector in some way or the other. While most expect some price corrections, there were also a few who felt that the election will not impact or influence the real estate sector in any way.
The survey also indicated that there is significant ambiguity over the Real Estate Investment Trust (REIT), a novel investment tool proposed by SEBI. The government will have to, thus, create more awareness about this. On the other hand, participants who did have information about REIT showed an inclination towards it.
The general sentiments reflected through the survey also highlighted that people have high hopes from the Real Estate bill. Participants feel that it will bring in the much-needed transparency in property dealings through provisions for registration of real estate projects and agents with the Real Estate Regulatory Authority; functions and duties of promoters and agents; rights and duties of allottees etc. On the contrary, few participants also felt that the Bill will increase delay in the projects due to another layer of bureaucracy.
Lastly, the survey also highlighted that people now have moderate return expectations from the real estate sector unlike before. The present conditions of the sector has made investors believe strongly that real estate will not give the same returns as before.
Summary
There is a great demand in the residential sector for affordable housing and Real estate sector should respond to this demand by incorporating better technology and efficient resource utilization. Property buyers and Investors are waiting to see new trends emerge in real estate buying or investment in 2014 post the general elections. Our survey also highlights that there is a strong need to bring in reforms in the real estate sector and make it more transparent and investor-friendly as shown by expectations from Real Estate Regulatory Bill and REIT.
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