In its latest quarterly reports, global real estate consultancy, Cushman & Wakefield (C&W), reported that an estimated 38,000 residential units were launched by organized developers in the first quarter of 2013 in major cities registering a marginal decline of approximately 2% over the previous quarter. The mid-range segment continued to constitute majority (60%) of the overall launches during the quarter.
Bengaluru recorded the highest number of launches in Q1 2013 at 11,622 units contributing close to 31% of the overall new supply in the top eight cities followed by NCR and Mumbai.
Large projects launched in the affordable segment in peripheral locations of North, South East and South-west Bengaluru was the reason for the substantial increase in launches. Also, infrastructure development initiatives have resulted in increased preference for the northern locations of Bengaluru, which contributed to 25% of the total units launched.
NCR, witnessed the launch of approximately 7,600 units but recorded a 39% decline in new launches over last quarter. Noida in NCR saw a decline of close to 70% because of the subdued demand and ended up being the primary contributor for the overall decline in number of launches in the NCR itself
All major cities saw a decline in new launches compared to the previous quarter, except for Bengaluru, Pune & Kolkata
Mumbai witnessed close to 7,200 units launched during the first quarter of 2013 but saw a marginal decline of 3% compared to the last quarter of 2012. A number of projects in the pre-launch phase at the end of 2012 were launched during the first quarter resulting in healthy launch activity.
The highest decline in units launched was witnessed in Hyderabad which saw an 89% decline in number of launches during the quarter. After substantial project launches during the last quarter of 2012, the city witnessed a lull in units launched in the first quarter of this year as the market waited for the units launched in the previous quarter to be absorbed.
New residential units launched more than doubled in Bengaluru and Pune in the last quarter, increasing by 144% and 109% respectively
Pune recorded an increase of around 109% compared to the last quarter of 2012 due to a spillover of project launches from last year. Increased activity in the North-east submarket primarily at Kharadi, Wagholi and Wadgaon along with the NH4 bypass was the primary reason for the high increase in number of units launched.
The mid-range segment had the highest contribution to new launches at close to 60%
CAPITAL VALUES INCREASE
According to C&W, the residential sector witnessed steady demand across most major cities with capital values in key markets witnessing 10-20% increase in prices over one year.
Chennai witnessed highest increase in capital values of about 40% across both high end and mid end segment compared to the last year. Bangalore and Gurgaon saw the 2nd highest increase in capital values at 30 % across India in high end and luxury segment as compared to the last year. While in the mid end segment, Gurgaon again saw among the highest increase of 18% along with Mumbai (south central) at 19%.
Chennai - Velachery witnessed the highest y-oy rise of 40% in capital values contributed by surge in demand due to upcoming infrastructural projects, whereas T.Nagar and Mylapore recorded 21-26% appreciation post the launch of new projects at high capital values.
Shveta Jain, Executive Director – Residential Services, Cushman & Wakefield said - “The country’s residential market witnessed some vibrant launch activity during the quarter despite the sluggish economic environment. Funding will remain a major challenge for developers while executing these projects. Given the rise in construction cost, cost of land and funding no major price cuts have been possible in the current subdued business environment. Developers are now following different strategies like the 20:80 scheme and selling smaller configurations at lower overall ticket prices to boost their sales.”
Shveta continued, “Capital values have largely remained stable across most micro markets except for some key locations in NCR, Chennai and Bengaluru. Prices are expected to remain largely stable in the coming months as developers will be looking mainly to boost sale and increase cash flows in projects being currently executed.”
Bengaluru witnessed the highest number of units launched compared to major eight cities across India that stood at approximately 11,600 units. This is more than double the number of units launched during the last quarter of 2012, catering to the affordable (49%) and mid-range segment (43%). Close to 40% of the total new unit launches were in South-east Bengaluru targeting individuals working primarily in the IT/ITeS sector. Infrastructure initiatives have resulted in increased preference for the northern locations of Bengaluru, which contributed to 25% of the total units launched.
Capital values in the high-end segment in Central and Off-Central locations witnessed an uptrend in the range of 17 – 30% over last year due to low availability. Eastern and Northern locations also saw an uptrend in high-end category capital values of 10-14%, mainly due to their proximity to IT hubs and upcoming infrastructure respectively. In the mid-end segment, South-west and Off-Central locations witnessed 13%-14% increase in capital values over last year.
North Bengaluru is expected to see an uptrend in capital values for the high-end category; North-west Bengaluru an uptrend in capital values for both high-end and mid-end segments because of the rise in demand due to the ongoing metro work; East Bengaluru a price rise in the mid-end category due to continuous demand from the IT population.
The National Capital Region (NCR) witnessed the launch of approximately 7,600 units, a decline of 39% compared to the previous quarter. The new launches were concentrated in the suburban locations of Gurgaon (66%) and Noida (34%) with over 80% of units catering to the mid-range segment. Due to the subdued demand, Noida witnessed a steep decline in new launches at close to 70% and ended up being the primary contributor for the overall decline in number of launches in the NCR. In addition, the new projects in Gurgaon were located primarily along Dwarka Expressway and in New Gurgaon.
Most locations in Delhi witnessed stable capital values in both mid and high-end segments. However, capital values in high-end segment in South Central Delhi witnessed 15% appreciation over last year due to limited supply and high demand.
Among the suburban locations, Gurgaon noted higher appreciation due to the high demand from both end-users, the workforce working in the various companies located here and investors, coupled with the limited project completions.
Gurgaon (NCR) saw a change in the capital values in the luxury /high end and mid end residential segment at 29% & 18% respectively over last year.
The capital values across NCR are largely expected to remain stable. However, with quite a few projects in final stages of construction and new project launches at higher prices, Gurgaon is likely to witness increase in capital values.
Increase in special marketing initiatives and benefits offered by developers along with steady demand amongst end users may result in marginal appreciation in capital values in some projects in Noida.
Mumbai witnessed close to 7,200 units launched during the first quarter of 2013. This is a marginal decline of 3% compared to the last quarter of 2012. Due to a number of projects in the pre-launch phase at the end of 2012 were being launched during the first quarter, Mumbai witnessed a healthy launch activity. Close to 80% of these new launches were in suburban locations like Goregaon, Malad, Borivali and Thane. The high-end segment continued to contribute the most at 67% of total units launched.
Low transactional activity and high levels of unsold inventory have resulted in stable capital values in most micro-markets across Mumbai.
However, with low availabilities in the mid-end segment, capital values in South Central Mumbai increased by 19% over last year. Mumbai’s Prime Western Suburbs (high end) witnessed a change in capital values at 21% over last year.
Also, an increasing trend is witnessed with developers offering apartments with smaller configuration as the ticket size for these apartments are lower, which could help drive up sales. Additionally, a number of developers are increasingly launching 1 and 1.5 BHK configurations in their developments.
Despite the decline in overall market activity, capital values are expected to remain stable in the upcoming quarters due to the rising input costs. South Central Mumbai is expected to witness increased level of activity with a few prominent projects expected to be delivered in the coming months.
Chennai witnessed a total of approximately 2,300 units launched during the first quarter of the year. This is a significant decline of 39% over the fourth quarter of 2012 and a 72% decline compared to the first quarter of 2012. Sluggish demand coupled with slower pace in receiving regulatory approvals is resulting in delays and is the primary reason that developers delayed new launches. Close to 74% of the new launches catered to the mid-range segment followed by the affordable category.
Velachery in mid end segment witnessed the highest y-o-y rise of 40% in capital values across India contributed by surge in demand due to upcoming infrastructural projects. In addition, T.Nagar and Mylapore recorded 21-26% appreciation post the launch of new projects at high capital values.
In the high-end segment Anna Nagar saw the highest increase at 38% due to high demand and lack of supply, followed by Kotturpuram(25%) and Nungambakkam(22%).
Most of the micro markets are likely to have stable capital and rental values in the coming months. Certain locations like Velachary, T Nagar and Adyar in the mid segment are expected to witness an increase in capital values due to high demand whilst East Coast Road, Rajiv Gandhi Salai and GST will witness a number of new launches in the next quarter.
The residential market of Kolkata registered stable capital values during the first quarter of 2013 as end-user sales which constitute majority of the demand in the residential segment were subdued. However, there was a 24% change in the high end residential capital values in Kolkata compared to the first quarter of 2012. New project launches in Kolkata increased by 9% compared to the previous quarter with majority of new launches in the mid-range category (74%) in the emerging southern peripheral locations of Garia and Sonarpur. The high-end segment contributed approximately 26% to overall launches. With ceiling on acquisition of large tracts of land, new project launches remained subdued, but a few developers launched additional phases in existing projects to cater to demand.
Hyderabad witnessed a total of approximately 600 units launched during the quarter, resulting in a decline of 89% compared to the fourth quarter of 2012 and a y-o-y increase of 11%. The city witnessed a lull in units launched in the first quarter of this year after substantial project launches during the last quarter of 2012 as the market waited for the units launched in the previous quarter to be absorbed. The new launches were spread across a number of locations like Banajara Hills, Tellapur, Bachupally, Moti Nagar and APPA Junction. Close to 74% of the total units catered to the mid-range segment followed by 17% in the affordable segment and 9% in the high-end segment.
An expected improvement in economic conditions coupled with the upcoming infrastructural developments is expected to drive demand in the coming months. Prominent residential locations such as Kukatpally, Madhapur,Gachibowli, Miyapur, Nizampet etc. are expected to witness a moderate increase in prices due to persistent demand. Also, Peripheral locations like Medchal and Shamirpet in the north, and Uppal and Nagole in the east witnessed healthy development activity due to better connectivity via the Outer Ring Road.
Approximately 6,700 units were launched in Pune during the quarter, which is an increase of over 109% compared to the last quarter of 2012 due to a spillover of project launches from last year. Majority of the new launches were adjoining the northern parts of the NH4 bypass followed by locations like Hadapsar and Manjri in east Pune contributing 26% to overall launches during the quarter. The proximity of East Pune to IT/ITeS hubs Hadapsar, Kharadi and Nagar Road is driving the demand in the location, which has seen a number of new projects launches in last couple of quarters.
Pune witnessed increase in capital values in mid-end segment in the range of 3% - 17% in areas like Koregaon Park and Aundh-Baner respectively.
Conservative market sentiments may lead to some downward pressure on capital values,
especially in the secondary sales market. However, owing to high interest of mid-end buyers, the NH4 Bypass (North) belt may observe marginal capital appreciation during the short term.
New launches in Ahmedabad continued to remain subdued with only 200 units launched during the quarter. Launches have remained subdued since the last year due to the expected changes in the Floor Space Index (FSI) norms across the city; developers are expected to launch new projects only once the new regulations are in place. The new Development Control Rules propose to raise FSI across the city and would lead to development of high-rise structures. Extra FSI will also be sold to developers for a fee, proceeds of which will be used for mainly the infrastructure development of the city. The Ahmedabad Urban Development Authority (AUDA) has also proposed the creation of an affordable housing zone in a 76 sq-km area encircling S.P Ring Road, a peripheral location, along with 38 defunct mills in Central Ahmedabad, which is likely to provide a much-needed boost to the sector. Select peripheral locations like Ranip, Gota, Bopal, South Bopal and Vaishnodevi saw healthy transaction activity due to availability in affordable projects.
 NCR, Mumbai, Pune, Bengaluru, Hyderabad, Chennai, Kolkata, Ahmedabad
 NCR, Mumbai, Pune, Bengaluru, Hyderabad, Chennai, Kolkata and Ahmedabad