The real estate sector is likely to see improvement in sales and equity deals in 2016 as the economy shows signs of revival on the back of various policy decisions taken by the government, a report said.
According to a survey jointly conducted by JLL and RICS, nearly 66.7% of respondents foresee improvement in sales over the next 12 months.
“The markets have witnessed significant stress with sales under pressure due to increasing prices, longer delivery timelines for projects and a range of such factors.
“However, a majority of the respondents (in survey) now expect sales to improve over the next 12 months and this indeed augurs well for the real estate market,” RICS South Asia Managing Director Devina Ghildial said.
The firms interviewed a wide range of investors, including private equity players in the real estate sector, for the survey titled ‘Peering into 2016: Taking Pulse Of Investor Preference’.
According to the report, nearly 71.1% investors believe pure equity investments in the sector will continue to increase over the next 12 months.
“Pure equity investments have seen a return and been on the increase and the momentum is expected to continue over the 12 months. This aligns with the recalibration of the investment community’s role as a long term partner with key and select developers,” it added.
A majority of respondents, however, feel that equity investments will be restricted to Grade A names and will not be available for developers with limited institutional financing track record over the next 12 months.
As per the report, investors clearly voiced that even though the refinancing cycle is not expected to meet its logical conclusion in 2016, the number of successful exits will increase this year.
“Driven by the need to increase returns and a desire to diversify, investor interest in international property markets is once again on the rise and India definitely seems to be leading that interest,” Ghildial said.
Commercial office and mid-segment residential property will be the top two preferred choices of investors, with IT/ITeS office rounding up the third spot, it noted.
From a city perspective, Mumbai and Bengaluru remain the top two preferred investment spots, with Pune coming in a distant third, beating the NCR.
“While the respondents are overwhelmingly optimistic on the sales improving in 2016, they are however circumspect on the possibility of REIT listings hitting the Indian capital markets in 2016 and the emergence of affordable housing as a viable investment theme,” JLL India Chief Operating Officer and International Director Ramesh Nair said.