The affordability of Indian residential real estate is at 15-year-best levels, aided by subdued increases in property prices and a rise in household income, says a UBS report.
According to the global financial services major, going forward residential property sales are expected to gradually recover over the medium term.
"We think India's residential real estate sector is at the cusp of a gradual demand revival aided by affordability at 15-year-best levels, high expectations of property price increases over the next one to three years, reasonable comfort on personal finances and implementation of new regulations aimed at regaining buyer confidence," the report said.
Moreover, improvement in current subdued job creation/income growth outlook could lead to even faster growth, it said.
"We expect 5-7 per cent rental growth for office assets in tech cities over FY19-FY20, aided by pre-committed demand amid limited supply," the report noted.
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Following the implementation of Real Estate Regulation and Development Act (RERA), though the demand-side impact taking time to play out, impact on supply is already visible.
RERA, was introduced in 2017 to improve consumer confidence in buying property, notably in buying under-construction units.
"RERA implementation has been slow and awareness is much lower than we had expected. This may imply that demand may take longer to recover, but favourable supply-side dynamics are already visible," UBS said in a research note.
The report further added that the sector's high inventory levels have also receded. Our latest urban consumer survey also suggests high expectations of property price increases.
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