The Delhi NCR realty market is still a favourite destination for affordable, mid-, and high-end housing segments. A K TIWARY writes
The Delhi NCR residential market is still a favourite destination for affordable, mid-, and high-end housing segments, even in this period of economic slowdown.
A recent report says that with increasing demand of housing cutting across segments in the Delhi NCR realty market, nearly 9,600 units were launched in the third quarter of this year. This is on a par with the number of units launched in the second quarter, and constitutes 22% of the total launches across Top 8 cities in the country like Bangalore, Ahmedabad, Pune, Chennai, Hyderabad, and Kolkata.
The NCR saw a total absorption of 35,000 units in the first half of 2013, showing an increase of 18% from the same period in 2012. Increase in sales can also be ascribed to the high number of project launches in the affordable category. While sluggish buyer sentiment has discouraged sales in some areas, locations like Dwarka Expressway, Noida Expressway, and Greater Noida continue to lure investors.
The affordable, mid-end and high-end segment contributed almost equally to the total launch activity during the quarter. The NCR market registered the highest contribution, 33% of all the high-end launch activity, among the Top 8 cities of India during the third quarter of the year. The majority of the high-end launches in the NCR were located in Gurgaon while the affordable units were concentrated in Noida. The twin cities of Noida and Greater Noida have together contributed nearly 55% of the total number of units launched while Gurgaon accounted for 44% during the quarter.
Reason for demand in the NCR
Realty experts say that over the past two years, the NCR market saw a fall in launches-by nearly 40%-compared to the peak levels of 2010. Short term and long term moving average of launches confirm a plummeting trend.
However, demand has recently stabilized and improved in the last few quarters, which indicates a healthy residential market scene for the NCR-and, if the supplydemand gap tapers further, the region is likely to face an upward pressure on property prices.
Shishir Baijal, CMD of Knight Frank India, says: “The NCR residential market indicated signs of stability in the first half of 2013. Nearly 49,000 units were launched in this period showing a marginal increase of 11%, compared to the first half of 2012. However, a comparison with the first half of 2011 and 2010 reveals a dip of 33% and 59%, respectively. It is quite evident that developers are keeping new launches in check in order to bridge the supply and demand gap.”
Developers have been cautious and remain focused on selling their existing projects rather than launching newer ones. Also, there are great opportunities in the secondary market for projects under construction because investors want to liquidate and reduce holdings. In fact, discounts are being offered in the range of 15-20% depending on the project size and the location. So, overall, this is a good time for people to buy as developers are willing to negotiate the right price and ready to close transactions. Cushman & Wakefield, global real estate consultants, says in a report that the Top 8 cities have seen an estimated residential unit launch of 1,32,000 units between January and September, 2013, which represents an increase of 5% over the same period in 2012.
The high-end property launches in the first three quarters of 2013, which was recorded at 23,500 units, has seen the highest growth at 142% over the same period last year, while launches
in the luxury-housing category recorded a decline of 10.5% between January and September, 2013, over the same period last year.
Shveta Jain, executive director (residential services) of Cushman & Wakefield, says: “Contrary to b y tradition, there has been a decline in new launch activities in the third quarter of 2013, as economic conditions have not been encouraging for developers. The slowdown in demand is largely owing to the low confidence of the consumer, who is put off by increased and consistently high pricing in key cities. Having said that, the demand from first-time buyers and end users has been consistent, as genuine buyers with adequate capital look at this phase as ideal to enter the property market on account of stable capital values.”
Apart from the Delhi NCR, Ahmedabad, Bangalore, and Chennai have seen a quarter on quarter increase of 41%, 25%, and 28% respectively till the third quarter. Though Hyderabad saw the maximum decline of 56% in launches compared to the second quarter of 2013, it however saw one of the highest rises in y-o-y (year-on-year) appreciations. The number of launches in 2013 more than tripled in Bangalore, to nearly 35,000, till September, 2013. Bangalore, the NCR, and Mumbai, contributed 27%, 23% and 19%, respectively, of the launches across the Top 8 cities in 2013.
Rentals have remained stable across most of cities, except Ahmedabad, which registered 4-10% decline in rentals across segments. Gurgaon in the NCR also registered a 4-12% dip in rental values for high-end spaces. Bangalore saw the maximum appreciation,
4-12%, q-o-q (quarter-onquarter) across a few submarkets in the mid-end segment capital values due to persistent demand from working population.
Kolkata registered 5-7% appreciation in capital values of prime areas, due to growing demand for high-end projects in these locations. Capital values across segments in Chennai, Hyderabad, and Pune remained stable during the quarter due to sluggish sales, subdued demand and rising construction costs.
High-end segment capital values in locations like Lower Parel and Worli in southcentral Mumbai declined by 2%, while in Gurgaon, they fell by 3-5%, which is likely to boost demand and push transaction activity in an oversupply scenario. Ahmedabad registered the maximum price correction of 4-8% across the majority of the markets for both mid-end and high-end segments in the third quarter of this year.
After a slow start in the first half of the year, the launch activity seems to have picked up in Ahmedabad, with 2,100 units launched in the third quarter of 2013. This was an increase of 41% q-o-q and exceeded the total number of launches during the first half of the year. Despite the sluggish market, significant pick up in the launch activity over the last two quarters could majorly be attributed to the fact that some planned projects can no longer be delayed further. Nearly 51% of the launches in this quarter were in the affordable segment and a majority of the launches were concentrated in the peripheral areas of SG Highway and Bopal.
Bangalore saw 13,200 units launched, accounting for the highest share of 30% launches across the Top 8 cities during the third quarter of the year.
It was the only city to cross the 10,000 units mark in launches for the third consecutive quarter in the year.
Despite the higher number of launches, the mid-end segment saw an appreciation of 5-12% in capital values across select sub markets. This was been primarily due to the growing demand of residential units in proximity to IT hubs and the paucity of new launches in certain central areas of the city.
A majority of the launches in the midend segment were concentrated in areas like Sarjapur Road and Bannerghatta Road in the south, Whitefield in east and Yelahanka and Jakkur in the north of Bangalore. The realty market of Chennai has continued to register an upsurge in the number of new launches for residential units in the third quarter of this year with more than 4,100 units launched. Nearly 94% of these launches are in the mid-end segment, followed by 4% in the affordable, and the remainder in the high-end segment. Compared to the last quarter, the high-end segment registered a decline of 41% in the number of new launches in the third quarter of 2013. It is expected that the next quarter will see the completion of 6,000 units, which will infuse new residential supply in the Chennai market.
Hyderabad saw nearly 1,945 units launched this quarter, a decline of nearly 56% compared to the second quarter. With Hyderabad contributing only 4% of the total launches across the Top 8 cities, activity in the residential market continued to be sluggish here. The mid-end segment contributed to more than half of the total launch activity in the quarter with Kukatpally registering the maximum activity in the segment. The affordable segment comprised 33% of the total demand followed by high-end segment at 11%.
Mumbai, the commercial capital of India, has seen nearly 7,200 unit launched in the third quarter of 2013. Though this was a decline of nearly 34% q-o-q, it was an increase of 19% for the first three quarters of the year, and was on a par with the average number of quarterly launches in the city over the past two years.
The decline in launches over the second quarter could mainly be attributed to slow sales in the market and the delay in regulatory approvals, as a result of which the fourth quarter might see a slight increase in launch activity. Panvel in Navi Mumbai contributed 64% of these unit launches in the third quarter with major contribution from a single large project. Central suburban areas like Mulund, Powai, and Wadala contributed 13% of the launches followed by Thane at 10%.
Nearly 3,850 units were launched in Pune this quarter out of which two-third came from the mid-end segment and rest from the high-end segment. Amidst sluggish sales, piling up inventories and soaring construction costs, the launch activity saw a decline of nearly 13% q-o-q, as developers adopted a wait-and-watch approach.
Source:Time of India