drop-in-new-residential-unit-launches

Residential market across major cities[1] in India witnessed a drop in total number of units launched by approximately 16% over previous year. 2012 recorded launch of approximately 1,62,000 new units of residential properties across the eight major cities. Of the total number of units launched, majority units were launched in the mid – end segment comprising approximately 83% of total launches.

With nearly 54,500 new units, NCR constituted a majority (34%) of the total number of new units launched in the year. Pune recorded the second highest number of fresh launches at approximately 24,000 new units, followed closely by Mumbai (22,500 new units approx.) and Chennai (20,800 new units approx.). Bengaluru recorded a drop of 50% in the number of new launches over previous year.

[1] NCR, Mumbai, Pune, Bengaluru, Hyderabad, Chennai, Kolkata & Ahmedabad

Mid-end segment saw the highest number of launches of approximately 1,35,700 units, though it was lower by nearly 15% over the previous year. Of the total mid-end housing units launched, NCR saw a total of over 50,000 units mostly concentrated in the locations of Gurgaon and Nodia. High – end and luxury segment units saw a 24% and 23 % decline respectively over the last year. Mumbai witnessed highest number of luxury unit launches (approximately 1,200 units) followed by Bengaluru and Pune in 2012.

Majority of the launches were concentrated in the second half of the year owing to uncertainties over regulations (Development Control(DC) rules in Mumbai, G.O. 245 in Hyderabad and issues pertaining to land acquisition in NCR) being resolved and the advent of festive season, a popular time for end-users to buy.

Sanjay Dutt, Executive Managing Director, South Asia, Cushman & Wakefield says, “In 2012 the residential market saw proactive and innovative marketing and new launches of specialist projects on one side but restrained activities in terms of large scale development as most developers were cautious not to overestimate the end user demand market. Aspects like high consumer inflation, existing high home loan interest rates and slower growth of the economy had a strong impact on the end users making them more price sensitive than previously experienced. On the other hand, cash strapped developers were not willing to take up projects that may fall short in interest from end users, thereby keeping their risk exposure to minimum.”

Sanjay continues, “Investor activities however have been strong in the residential market, with many viewing this as the right time to enter the market with the much needed capital for developers. This has been the primary reason why most markets across categories experienced a rise in values.”

NCR   

NCR recorded the largest number of unit launches in 2012 a total of nearly 54,500 units approximately. This was however, lower by 31% over the total launches last year. One of the reasons for reduced number of launches in 2012 was attributable to the restriction on usage of underground water in Gurgaon which delayed construction timelines of various projects in Gurgaon. Majority of over 50,000 units were in the mid – end segment. Of the total projects launches, highest numbers of units were launched in Noida followed by Gurgaon.

MUMBAI  

Mumbai recorded an increase of 72% in total number of new launches in 2012 over last year with over 22,400 new residential units being launched in 2012.  This is mainly attributable to clarity on Development Control Rules (DCR) which had held up the launches of new projects from last year. The new project launches were mainly concentrated in the suburban locations like Borivali and Kandivali in the western suburbs and Thane and Mulund in central suburban districts. Out of the total units launched, 64% catered to mid-end segment. Western Suburban locations of Juhu, Khar and Andheri witnessed new launches in the high-end segment.

BENGALURU

Bengaluru saw a decline of 50% over previous year with 16,543 units launched in 2012. The drop in new launches was mainly due to subdued demand which was recorded upto first half of 2012. As a result, developers were cautious about launching new projects in a bid to avoid an oversupply situation. Out of total residential units in the city, maximum launches (75%) catered to the mid-end segment while high – end and luxury units were launched more cautiously. North Bengaluru witnessed maximum number of unit launches owing to availability land coupled with improving infrastructure. The announcement of commercial projects such as KIADB Park, Devanahalli Business Park as well as improving connectivity to the international airport has resulted in healthy demand for residential properties in North Bengaluru too.

CHENNAI

Chennai’s residential markets continued register a steady trend during 2012. There was a marginal drop in new launches by 6% in 2012 over last year. Chennai witnessed a launch of approximately 22,000 units of which more than 90% catered to the mid-end segment.  Augmented hiring and spill over demand from realignment of purchase decisions was also noticed to drive the demand in the mid segment during the year. Launches in the high-end segment saw a rise of approximately 31% over the last year while the mid end segment recorded a marginal decline of 8% in the same period.

KOLKATA

Kolkata’s residential market saw a rise of approximately 19% in total number of launches in 2012 over the last year with approximately 8,900 units being launched in this year. Most of the launches were in the mid end category (5,500 units) within the price bracket of INR 36 lakh to INR 60 lakh. A considerable number was recorded in the high-end segment (3,400 units) as well. The short term outlook of the city suggests a cautious approach by end-users in the wake of high home loan rates coupled with inflation.  The transaction scenario is likely to remain slow with consumers postponing their purchase decision in expectation of better market conditions.

HYDERABAD

Approximately 8,000 residential units were launched in 2012 registering 2% fall as compared to 2011. However, the number of launches during second half of 2012 increased significantly when compared to first half of 2012, this is mainly on account of revision of the Land Reservation Clause being announced in end of June 2012. The city witnessed launch of 6,500 units during second half of 2012 as compared to only 1,500 units launched in first half of 2012. Majority of launches (more than 60%) catered to mid-end segment concentrated in North West of Hyderabad falling in the price bracket of INR 40 lakh to INR 70 lakh.

PUNE  

Pune saw a significant increase in of 34% in the number of new launches in 2012 over the last year. With over 24,000 new units in the market, supply has complemented the demand in the market.  Owing to the city’s increasing commercial importance, the city has witnessed increased demand for residential units in last few years.  Taking a cue from a healthy demand, the market saw a rise in the total number of units launched in 2012 and most of the projects (over 50%) were launched in the western periphery locations followed by eastern peripheral locations. Locations in west such as Aundh, Baner, Pashan , Wakad, etc witnessed healthy construction activities owing to close proximity to the commercial hubs of Hinjewadi, their access to Pune city as well Mumbai-Pune Expressway. Also, locations in the east such as Kharadi, Hadapsar, Wagholi, etc also witnessed robust construction activities owing to large number of offices, proximity to the airport, robust physical and social infrastructure and established retail markets, etc.

AHMEDABAD  

In 2012 the city saw a drop of nearly 50% over the previous year in the total number of units launched due to developers waiting for an anticipated increase in FSI norms. Most of the developers were awaiting the state elections to conclude post which the proposed increase in FSI is expected to be cleared. Meanwhile, majority of the launches were in the mid-end segment while high-end segment comprised just over 12% of the total units launched in the market. Ahmedabad did not witness the launch of any luxury residential units this year.