In the latest report from international property consultants Cushman & Wakefield, there has been a drop of 12% in new residential project launches in 2013 as over last year. The total estimated unit launches were recorded at 172,500 units across major eight cities of India with Bengaluru recording the largest number of units launched recording a rise 15%. Chennai on the other hand saw the sharpest decline in launches of new residential units which represented a drop of 39% over last year. Mumbai (6%) and Kolkata (3%) also saw a rise in the total units launched in 2013 over last year. However, NCR (-33%), Pune (-20%) and Ahmedabad (-5%) recorded a decline. Mumbai and Delhi together constituted over 65% of the total launches. 

Sanjay Dutt, Executive Managing Director, South Asia, Cushman & Wakefield says “In the current economic scenario both buyers and developers are taking a cautious approach not only towards residential real estate but across all asset classes of real estate. However, given that most aspects of development such as construction cost, development cost, cost of land, time taken for approval and cost of debt all have been on an upward tangent developers have not been able to lower cost . Thus many developers took to innovative marketing and pricing strategies to ensure better responses such as in the 20:80 scheme was recently discontinued following RBI’s recent announcement.”  

The high end category residential units have seen a tremendous rise of over 50% in 2013 even while the largest quantum of launches in residential units was in the mid end category, there was decline of 13% in the total launches of residential units in the mid end category over previous year. There was a sharp drop in the launches of luxury units which declined to only 1100 units with largest number of units being launched in Bengaluru.  

Sanjay Dutt further added, “Developers are cautious about the configuration and designing of their properties today and revisiting their drawing boards to create units which would be appreciated by end users. Alternately, lower demand for luxury residential has reduced the number of launches in this category also limiting them to cities of Delhi (NCR), Mumbai and Bengaluru which still have some demand for such units. One category which has not seen the same enthusiasm despite government backing of ECB and other benefits has been the affordable housing sector which can be attributed to the issues of acquiring land at preferential rate and the subsequent building cost which has been restricting.”  

Most micro markets in India have seen a rise in rental values ranging from 2% - 50% mostly in the secondary or in established new projects that are seeing next phases of development. This was on account of existent demand from end users who are looking for better security for their investments thereby choosing to either buy in already completed or from new developments that have seen good track record. Despite an overall slowdown in the economic scenario due to high inflation and reduced sentiments, purchasers with financial security  have viewed this year as a good time to enter the market as prices had been stable for a significant period between 2012 – 13.  

The city of Bengaluru, Chennai and Hyderabad recorded appreciation in their capital values almost universally with the exception of a few markets. Central Bengaluru (mid end properties) comprising of Lavelle Road, Off Palace Road, Off Cunningham Road, Ulsoor Road, Richmond Road, Race and Course Road recorded the highest appreciation of 50% followed by Off Central district of Bengaluru (Vasanth Nagar, Richmond Town, Indiranagar) recorded an appreciation of 36% in the Mid end category. Velechery in Chennai recorded an increment of 27% in capital values over last year. Most of the locations which saw significant rise in capital values are established residential markets that have seem limited launches of new properties even while demand in these locations both from end users as well as investors have remained strong beating the otherwise low ebbed sentiments. High end segment of most Hyderabad’s market also recorded an increase in capital values in the range of 20% - 22%. 

High end segment in NCR markets of South West, South East and Luxury Category in Gurgaon all saw a decline in capital values to the tune of 5% - 7% over the last year mostly on account of achieving already high values which in the current market scenario looked unsustainable. Poteri (GST) Road in Chennai recorded the largest year – on – year decline of 8% in 2013 on account of an oversupply situation in this micro market.


In Bangaluru, Southern and Eastern submarkets witnessed the highest number of launches this year accounting for approximately 43% and 27% of the total launches respectively. Further, proximity to workplaces, developed social infrastructure is the primary reasons to drive the inherent residential demand in these areas. The year also witnessed several prominent developers venturing into bigger affordable projects with several amenities like swimming pool, garden and playing area to name a few, on the Southern and Western peripheries of the city. These projects targeted first time home buyers with competitive pricing and smaller unit sizes; they also witnessed interest from the long term investors. Almost 5% of the total launches accounted for Villa/ Row houses projects, primarily concentrated in Southern and Eastern submarkets of the city given their connectivity and proximity to workplaces. The year on year average capital value appreciation across the city remained in the range of 10-20%.  


In 2013, Chennai witnessed more than 13,000 new residential unit launches, a sharp decline of 38% compared to 2012. This is due to availability of ready-to-occupy residential products in many micro markets like Rajiv Gandhi Salai, Grand Southern Trunk Road and some parts of North Chennai Since Chennai is an end-user driven market, developers continued to concentrate on residential projects with better amenities to cater to the changing consumer preferences. The number of affordable housing projects accounted for 11% of the total new launches this year and some developers ventured into joint ventures to cater to the demand in this category. There was approximately 60% y-o-y dip in the number of luxury launches.  


DELHI NCR region in each subsequent quarter in 2013 saw a decline in new unit launches. Overall, 2013 witnessed a decline of 33% in new launches as compared to 2012. The biggest decline was in the luxury segment which saw no new launches. This was followed by a 37% and 29% decline in mid and affordable segments respectively. High-end segment saw a marginal decline of 2% in 2013. Following the trend in 2012, more than 90% of the new launches in 2013 were in the affordable and mid segment. While H1 2013 saw launches primarily in the affordable and mid segment with marginal (2%) contribution from the high-end segment, H2 2013 on the other hand witnessed 18% of the total launches in high-end segment over the past one year Delhi locations saw decline in capital values while Gurgaon and Noida witnessed appreciation due to relatively lower ticket size and new project launches which offer construction linked plans as opposed to ready properties in Delhi locations. 


In Hyderabad, mid segment continues to have the majority share of 78% in terms of total unit launched in 2013 spread across locations such as Madhapur, Gachibowli and Kukatpally. The high-end segment constitutes 22% share across areas like Madhapur, Gachibowli, Chandanagar, APPA Junction. Total units launched in high-end segment in 2013 declined by 73% compared to 2012. Whereas, unit launched in affordable and mid segment have remained stable as compared to 2012. The highest appreciation in capital values was recorded in Q2 2013 due to revision of guideline values 


Kolkata registered an increase of 3% in the total number of new residential units launched in 2013 as compared to the last year. North-east submarket was the highest contributor (35%) in overall new launches in 2013 followed by Peripheral locations (Garia, Narendrapur and Sonarpur in South. Madhyamgram, Barasat, Sodepur in North) that contributed 24%. Developers continue to focus more on the mid-end segment that has the majority share (at 70%) in total units launched in new projects during 2013. The total units launched in the high-end segment in 2013 has dropped by about 18% compared to 2012, while the year 2013 has witnessed around 300 units launched in the luxury segment as against none in 2012. Capital values y-o-y have appreciated in the range of 5% -17%.  High-end segment in prime locations of Central and South West Kolkata have witnessed the highest appreciation owing to new projects being launched at higher price points due to higher land acquisition and other input costs. The year 2013 has witnessed launch of branded homes and golf centric villas in the luxury segment in South-east and North-east submarkets respectively. Also, a unique project on the concept of ‘boat homes’ in North-east submarket was launched during the year that garnered good interest from the investors community. 


In Mumbai, the capital values have remained stable during the fourth quarter compared to the last year however with capital values steadily increasing rental yields in the city have declined. Capital value appreciation in the high-end segment have been the highest in prime locations of South (9%), South Central Mumbai (10%) and Western Suburbs Prime (17%). Infrastructure projects like the monorail and the eastern freeway which is already operational has provided impetus to locations such as Wadala and Chembur. In Mumbai, overall launches have remained healthy during the year and have increased by 6% to 30,800 units compared to 2012 Contribution of 1BHK configuration was also high in suburban and peripheral locations with unit size in the range of 600- 720 sf. 


In Pune, the number of launches has declined by 20% compared to last year. The High -end segment contributed to more than 20% (22.86%) of the launch activity during the year as compared to just 6% in 2012. High-end/ Luxury segment launches which were earlier concentrated mainly in core residential areas have increased during the year and were spread across micro-markets like Kharadi, Wagholi, Balewadi, Baner etc. The NH4 Bypass has evolved as a preferred residential location among developers as majority of launches during the year were located along the NH4 Bypass (North) corridor. Over the past few months, many high rise projects of more than 15 storeys have been launched in Pune. 


In Ahmadabad, the capital values have remained stable during the fourth quarter of the year. Both rental and capital values across the city declined in the range of 5-10% in select locations due to subdued demand from end-users. The mid segment contributed 60% to overall launches followed by the affordable segment at 36%.  As, one-kilometre radius along Sardar Patel Ring Road being declared as an ‘Affordable Housing Zone’ with an FSI of up to 4, and the Ahmedabad Urban Development Authority proposing the construction of up to15 lakh units of affordable housing in the city, supply for the segment will go up substantially.