The Indian real estate market, which has been in a slump for the past three years, could be on the path to recovery, property consultant Knight Frank India suggested, citing better home sales and lower unsold inventories in the first six months of 2016.
In the first half of the year, home sales in the top eight cities, including Mumbai, the National Capital Region (NCR) and Bengaluru, rose 6.6% from a year ago, while unsold inventories fell 7%, according to a Knight Frank report released on Monday.
During the period, 135,000 homes were sold, while unsold inventory fell to 660,000 units from 710,000 units recorded in the first half of last year.
The report also pointed out that new launches fell 9% in the six months to 107,000 units as developers focused on selling stock before bringing new inventory into the market.
Measures such as the Real Estate Regulatory Act (RERA), the recent amendments to real estate investment trust (REIT) norms, a correction in prices in most markets and a lowering of interest rates in the past six months have helped in improving the overall sentiment of both investors and homebuyers in the country.
The report attributed the price correction to cash-strapped developers, high inventories and a trust deficit among customers.
The report also forecast that total absorption of office space is expected to touch 42.7 million sq. ft, up from 41 million sq. ft by the end of this year, led by manufacturing and information technology(IT)/IT-enabled services.
However, e-commerce companies which have lapped up office space in the last two years have lost steam, with transactions in the segment falling around 78% during the period.