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Tuesday, January 30, 2018

New Home launches pan-India drops 12% in Q4: PropEquity Study

New Home launches pan-India drops 12% in Q4: PropEquity Study
             Unsold Stock declined slightly due to lack of new launches

Unsold inventory dips by 3%

Market to further improve in Q1

In a report released by PropEquity, India’s leading real estate data, research and analytics firm on Monday, it said that new home launches dipped 12 pct across top 9 cities in the fourth quarter of 2017 from 15,593 units to 13,666 units.

Lack of new launches was majorly attributed due to developers focussing on compliances with RERA and implementation of GST.

Also, as a measure of the slowdown in the real estate prices stabilizing, capital values including resale saw negligible correction if any.


Weighted average prices in the quarter remained at similar levels to Rs 6,634 PSF from Rs 6,639 PSF indicating bottoming out of correction.

“2018 should hold as a stabilization year for the sector since now both developers and buyers are more attuned to this changed regulatory scenario. The implementation of RERA is encouraging developers to focus on the completion of existing projects. Consumer sentiment too, has greatly improved,” Mr. Samir Jasuja, founder and CEO at PropEquity said.

The unsold inventory dipped by 3 pct to 5,86,446 units from 6,05,323 units due to lower new launches and developers focussing on clearing their existing unsold inventories which is at the finishing stage.

“Many buyers, sellers, banks and private equity investors are waiting for the budget announcement as they expect some major positive news from the govt. to boost real estate sector. We expect clarity of taxes on REITs as the confusion has led to very poor interest by investors. We believe increase in tax deduction limits for housing loans is extremely critical to boost housing sales as this will lead to many families moving to owned flats instead of rented ones,” Mr. Jasuja added.

Housing demand (absorption) across key cities dropped by just 9 pct to 32,546 units from 35,944 units due to fewer new projects in the market and end users showing signs of buying rightly priced projects.

Nine cities were included for the study including Gurgaon, Noida, Mumbai, Kolkata, Pune, Hyderabad, Bengaluru, Thane and Chennai.

Cities

Gurgaon

The city gained some momentum in Q4 after GST and RERA were introduced in the previous quarter as approx. 1,300 units were launched during the period

During Q3 2017, no new projects were launched as developers in this region were cautious due to RERA & GST compliance and were looking to clear existing inventories.

New Supply is expected to stay low for at least 6 months as RERA and GST will lead to implementation and compliance challenges.

Absorption witnessed a considerable change on Q-o-Q basis and was increased by 8% showing trends of uptick in demand

Prices were at Rs 6,071 PSF as available units comprised primarily of mid and premium segments.

Golf course road extension and New Gurgaon witnessed momentum in terms of absorption. Demand was mostly witnessed in the Luxury segment (71%) followed by Mid segment and Affordable segment at 27% & 2% respectively.

Going ahead, with prices down by 4% on Y-o-Y basis, the city is likely to witness more demand in the future.

Noida

In Noida, only one project was launched in Q3 2017 which was catered to the Affordable segment.

Absorption increased on Q-o-Q (6%) and decreased on Y-o-Y (54%) basis. Weighted Average Price stood at INR 5,431/sft which indicates that the majority of the unsold units are in the mid segment.

Unsold stock in Q4 witnessed no change on Q-o-Q but decreased by 11% on Y-o-Y basis.

Going ahead, prices are unlikely to go down further as corrections were already witnessed post demonetization.

Mumbai

New launches witnessed noticeable drop on both Q-o-Q (25%)& Y-o-Y (70%) basis.

Absorption too witnessed a considerable fall since they declined by 23% (Q-o-Q) and by 39% (Y-o-Y). These numbers of lesser new launches and absorptions point out that both supply and demand have been hit for the city.

Demand was considerably high in Kandivali(W), Mulund(W) and Andheri(E), with these micro markets having the highest absorption numbers. Luxury segment was the most dominated one with a share of 60%.
Being more inclined towards the luxury market, correction in prices may revive the residential sales in future.
Kolkata
Q4 2017 witnessed a considerable decrease in new launch activity as compared to Q-o-Q and Y-o-Y basis.
Absorption declined by 14% on Q-o-Q basis and 55% on an Y-o- Y basis indicating that demand has fallen significantly in the city.
Weighted Average Price of absorbed units stood at INR 3,831/sft, increasing by 3% from the previous quarter. The weighted average price of unsold units stood at INR 3,478/sft
The Kolkata residential market has witnessed contraction of new launches. Regions like New Town and Rajarhat maintained their dominance in terms of sales. Most of the new launches in the recent months were witnessed in peripheral locations of the city.
Hyderabad
New Launch activity in Q4 2017 witnessed an tremendous increase of more than 100% on Q-o-Q basis but reduced by 70% on Y-o-Y basis.
Absorption also witnessed a marginal dip of 8% on Q-o-Q basis and 36% on Y-o-Y basis.
Weighted Average Price stood at INR 3,892/sft which indicates that the majority of the unsold units are in the affordable and mid segments.
The new launch activity witnessed upward trend during the quarter and is likely to rise in upcoming months. Steady increase in commercial activity in and around Hitech City is most likely to attract housing demand in the North-West region in the secondary market.
Bengaluru
Q4 2017 witnessed a considerable decrease in the new launch activity as compared to the previous quarter. On Y-o-Y basis also the launches decreased drastically.

Absorption also decreased by 5% and 45% on Q-o-Q and Y-o-Y basis respectively.

Weighted Average Price of unsold stocks stood at INR 4,674/sft which indicates that the majority of the unsold units are in the mid segment.

Mid segment contributed approx. 67% of the total absorption catering to the higher demand from IT professional of the city followed by Luxury with 28% and Affordable segment with 6% respectively.
The city will witness completion of approx. 4 Mn sft of commercial space by the next quarter which is likely to create rental driven demand. Consequently areas like Outer Ring Road, Electronic City and Whitefield may keep the residential market active in terms of sales.

Pune
The city in Q4 2017 witnessed an steep decrease of new launch activity by 78% and 93% on Q-o-Q basis and Y-o-Y basis respectively.
Absorption also witnessed a substantial drop of 9% and 37% Q- o-Q basis and Y-o-Y basis respectively.
Weighted Average Price of available stock stood at INR 5,089/sft which indicates that the majority of the unsold units are in the mid segment.
Micromarkets like Bavdhan, Kharadi and Hinjewadi may continue to witness some traction owing to the upcoming commercial space. Demand for rental housing is most likely to increase as approx. 2.1 Mn sft of commercial area is scheduled for delivery in the upcoming quarter of 2018 in South West and North East region.
Chennai
Minimal launch activity took place in Chennai during Q4 2017. The Developers were more cautious about the launching of new projects as all the approvals has to be received and the project has to be registered in RERA website before launch.
Absorption witnessed a sizeable dip of 6% and 54% on Q-o-Q and Y-o-Y basis respectively. Weighted Average Price stood at INR 4,826/sft which indicates that the majority of the unsold units are in the mid segment.
Buyer’s interest was mostly towards properties that were nearing completion where areas like Perambur, Medawakkam and Pallikaranai witnessed some demand.
Thane
Q4 2017 witnessed a steep dip in new launch activity by 76% and 90% on Q-o-Q basis and Y-o-Y basis respectively.
Absorption also witnessed a considerable drop of 9% and 31% on Q-o-Q basis and Y-o-Y basis respectively.
Weighted Average Price stood at INR 5,657/sft which indicates that the majority of the unsold units are in the mid segment.
Demand is considerably high in the region beyond Thane and micro markets such as Dombivali(E) and Badlapur as the majority of the projects in the region falls in the affordable segment. West and East region witnessed considerably lesser absorption.
High unsold inventory and less absorption may refrain the developers from launching new projects; supply may remain at similar levels in the next quarters.
About PropEquity:
P.E. Analytics owns and operates PropEquity which is an online subscription based real estate data and analytics platform covering over 91,934 projects of 25,438 developers across over 42 cities in India. We add approximately 300 projects every month. It is a premier Business Intelligence product- a first of its kind in India in the Realty space.

For media enquiries, please contact:

Vivek Seal, M:9953683917, 7838773388, E: vivek.seal@printel.in


Diksha Taneja, M: 9899567304, E: diksha@printel.in
New Home launches pan-India drops 12% in Q4: PropEquity Study Reviewed by S. Chitra on January 30, 2018 Rating: 5 New Home launches pan-India drops 12% in Q4: PropEquity Study               Unsold Stock declined slightly due to lack of new launches ...

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