In an end of the year report for residential market for metropolitan cities of NCR, Mumbai and Bangalore, Cushman & Wakefield research records a drop in launch prices in high development activity markets of these cities. The analysis records that new residential projects in select micro markets are cheaper by 4% - 20% on Average Weighted Basic Sale Price over the last 2 years. The report tracks the development activities in locations of Dwarka Expressway, New Gurgaon Southern Peripheral Road Sohna, Noida Expressway and Noida Extension in NCR; Thane, Goregaon and Malad in Greater Mumbai and South-West and Southern submarkets in Bangalore.
The suburban location of Goregaon in Mumbai registered the biggest decline in Average Weighted Basic Sale Price at 20% where the psf rate averages at INR 10,500 per sf in 2015 followed by Thane which saw 18% decline. Southern Peripheral Road in Gurgaon also saw a decline of 10% in average base selling price of new launch projects compared to 2013. In contrast, most of the submarkets in Bengaluru witnessed steady launch prices except in Far South and Western submarkets where average new launch prices in 2015 declined by 2-7% compared to 2013.
South East micro market of Bangalore was an exception to the rule where both the Average Weighted Basic Sale Price (19%) and the Average Ticket Size (18%) of apartment saw an increase.
Shveta Jain, Managing Director, Residential Services, India Cushman & Wakefield said, “A correction of the launch prices will ensure attractiveness and relevance of these locations to the end users. The economic confidence slowly creeping back into end user sentiments aided by a corrected Base Price as well as lowered ticket size is likely to provide the needed boost to improve sales.”
With declining number of new launches amidst a slump in buyer’s interest, Delhi-NCR witnessed new unit launches aggregating approx. 23,000 units in 2015, approximately 79% of the units were launched in the locations of Dwarka Expressway, New Gurgaon Southern Peripheral Road Sohna, Noida Expressway and Noida Extension in NCR. Half of the total new launches in 2015 were in the mid segment at approximately 12,400 unit.
With a view to attract buyers, developers have tried to bring down the ticket size of their offerings by either reducing unit sizes or reducing capital values or both. Such efforts from developers have been witnessed across submarkets especially in Southern Peripheral Road, New Gurgaon and Noida. Dwarka Expressway and Southern Peripheral Road saw the largest decline in launch prices in NCR of 10% as against 2013 in Base Selling Price.
Mumbai witnessed a 37% decline in residential unit launches to 15,735 units, from the corresponding period last year with Mulund, Thane, Goregaon and Malad accounting for nearly 51% of total launches during 2015. The new launches in 2015 have been smaller in configuration therefore with reduced base selling prices and smaller units, the ticket size (cost per apartment) has also seen a decline in these key markets. The submarket of Malad witnessed ticket size reduction by 15% despite average launch prices (mid segment) declining by only 8% primarily due to significantly reduced average unit sizes. Thane and Goregaon witnessed a decline in Average Weighted Basic Sale Price by 18% - 20% as well as reduced ticket size of new projects in 2015 compared to 2013.
The unit launches in Bengaluru in 2015 have substantially declined by 62% to approximately 15,600 in comparison to 2014. The city has witnessed slower sales of existing inventory, resulting in reduced new unit launches. However, in comparison to the other cities, Bengaluru has shown an exceptionally stable market trend. While the new unit launches have not seen a reduction in the unit sizes or ticket sizes, the focus segment has changed over the last two years. According to Cushman & Wakefield research, in 2015, a majority of the new launches (83%) were now concentrated in the mid-segment. While new launch prices have remained stable across most submarkets, Far South saw developers reducing the Average Weighted Basic Sale Price in mid segment by 7%, to remain competitive. South East micro market of Bangalore was an exception to the rule where both the Average Weighted Basic Sale Price (19%) and the Average Ticket Size (18%) of apartment saw an increase.
New launches in 2015 were concentrated mainly in few submarkets including Far South and South-East submarkets. Approximately 47% of the new unit launches in 2015 were witnessed in Far South, South east and West submarkets in Bengaluru. A closer examination of the ticket prices and base selling prices in these submarkets reveals that Bengaluru continues to be a stable market in terms of ticket prices, with developers not always resorting to lowering of selling prices or reducing apartment configurations to make them more affordable.
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Sitara Achreja, Director, Marketing & Communications
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