The real estate sector is viewed to get boost in its growth in the second half of 2014 and the major factors that are considered to drive the growth are the formation of new government in the center post general election, cuts in interest rates, and corporate dealings.
Real estate experts are common in one opinion that post general election with the formation of government increase in investment in business is expected that will enhance the growth of the sector in the second half of 2014.
With this outlook about the real estate sector, let us take a look at the performance of the market in different sub sector and segments across the country.
Residential Segment
The year 2013 was clearly a dull year, most of the residential segments in major cities such as Mumbai, Delhi-NCR, and Pune saw decline in sales in the first three quarters of the same year. According to one of the global property consultants the evaluated average prices increase by 10 per cent over a year-on-year basis in the first three quarter of 2013 but the growth inclined towards suburban and emerging areas in Tier II cities and rental value increased by 8 per cent during the same period.
Consumer sentiment is expected to soften in the first two quarters of 2014 and already it is witnessed that consumers are sitting on the fence and waiting for the right moment to grab the opportunity. During 2014 the residential prices are likely to increase by 10-12 per cent and absorption of residential units will increase and thereby reduce the piled up inventory.
In the second half of 2014, the interest rates are expected to reduce and this will drive the sales and absorption of the residential units.
Commercial Segment
Office: The office space segment suffered the most in 2013 as occupiers delayed leasing activity due to downcast and ambiguity. The absorption of office space in major seven cities of the country decreased roughly 14 per cent over quarter-on-quarter (q-o-q) basis in the third quarter of 2013. In 2014, the vacancy rates in office properties will increase due to increase in supply and absorption is likely to remain moderate.
Retail: With the entry of multi-brand retailers, the retail segment is likely to see huge activities in 2014. The entire vacancy in malls has reduced by 2 per cent due to increase in newly launched malls and those malls that were started in the year 2013 have witnessed 94 per cent of occupancy.
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