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Sentiment in the real estate industry swung to the optimistic zone in October-December quarter, according to Knight Frank-FICCI-NAREDCO quarterly survey. For the first time in 2020, the 'Current Sentiment Score' of the Real Estate Sentiment Index entered the optimistic zone, jumping 14 points to 54 in the quarter, the survey report showed.

A score of above 50 indicates ‘Optimism’ in sentiment, a score of 50 means the sentiment is ‘Same’ or ‘Neutral’, while a score below 50 indicates ‘Pessimism’, according to the survey. Those surveyed are developers, banks, financial institutions and private equity players operating in the sector.

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The Future Sentiment Score surged to 65 points in Q4 2020 from 52 points in Q3 2020, it said. Region wise, the western part of the country saw the sharpest jump in Future Sentiment Index. This zone’s Future Sentiment soared to 66 in Q4 2020 from 47 in the previous quarter, added the report.

The improvement in real estate sentiment in western India is aided by the stamp duty cut announced by the Maharashtra government during the quarter. Although for a temporary period, the move is likely to help developers, especially in Mumbai and Pune offload ready inventory. In fact, Mumbai-based developer Oberoi Realty Ltd reported a two-fold jump in new residential bookings in the December quarter, showed its recently published quarterly earnings.

Real estate analysts are of the view that buoyancy in sales could also prompt other state governments to reduce stamp duty and ease registration requirements.

For now, hopes from the upcoming Union Budget are rising. Expectations include the industry’s long-pending demands such as industry status, reduction/rebate in the Goods and Services Tax, increased allocation to Pradhan Mantri Awas Yojana and extension of tax holiday for affordable housing projects, among others.

"Industry status will help the borrowing capacity of the players. Loan disbursal at cheaper rates and inflow of liquidity will help kick start stalled as well as new projects. Input tax credit will provide relief from double taxation. These policy measures will also boost the office market demand," analysts at HDFC Securities Ltd said in a report on 24 January.

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