An estimated 17500 residential units were launched by organised developers in the second quarter of 2012 in major cities across the country, registering a decline of nearly 44% over the previous quarter, says a report by global real estate consultancy, Cushman & Wakefield (C&W). This decline in launches can be attributed to a number of factors such as delay in approvals, significant inventory in certain locations as well as postponement of project to coincide new launches with the festival season.
Pune was among the few cities that saw an increase in number of launches. Given the inherent demand in the city it also recorded the highest number of launches accounting for nearly 37% of the total new supply.
Of the 17,500 units launched 70% catered to the mid segment as it continues to see maximum demand from end users and investors.
According to C&W, the residential sector witnessed steady demand across almost all the major cities with capital values in majority of the micro markets remaining stable across high end and mid end segment properties.
Meanwhile, the luxury housing segment continued to witness demand with a few high value transactions being concluded in cities like Mumbai and NCR. Some of the prominent micro markets that recorded appreciation include Gurgaon – NCR, in which the luxury segment witnessed a rise of 10% in capital values. Prime high-end locations such as Central Bengaluru, Far North in Mumbai, South Kolkata also recorded an increase in capital values of 11%, 9%, and 6% respectively, indicative of steady demand.
Capital values of mid segment properties in almost all the cities also remained largely stable during the quarter with a few exceptions such as North and South-west Bengaluru recording an increase of 13% and 10% respectively; Powai in Mumbai recording an appreciation of 12% in 2Q 2012.
Shveta Jain, Director, Residential Services Cushman & Wakefield India said “Going forward, we anticipate an improvement in the economic scenario will provide the much needed impetus to boost the demand. Values are expected to remain stable in the short term and the developers may also offer attractive options and incentives to attract buyers during the festive season.”
NCR
NCR comprising of Gurgaon, Noida and New Delhi saw a decline of approximately 24% in new launches. Of the projects launched, Noida saw the highest number of new units launched in Q2 2012. Most of the projects were launched in the mid segment category on account of demand from that segment. As a result of high demand in the location, mid segment properties in Gurgaon saw a rise in capital values of 6% (approx.) over the previous quarter. Capital values across other micro markets in both categories – mid and high–end, remained stable with the exception of the luxury category in Gurgaon, which recorded a rise of 10% in values over the previous quarter.
Shveta Jain, Director, Residential Services, Cushman & Wakefield India said “Several projects are in the pre-launch stage in Gurgaon are likely to be launched in the coming months at higher prices revising the market benchmark upwards. The rents and capital values are expected to remain stable in the short term barring Gurgaon and Noida, which may witness marginal appreciation.”
MUMBAI
The city recorded launch of only 9 projects totalling 1,200 units, significantly lower than 4,400 units in the previous quarter. The new projects were mainly concentrated in the peripheral locations with a few located in the suburban locations of Andheri and Goregaon and they were launched at higher prices. Capital values remained stable across all micro markets barring those in North, Far North and North-East. This was mainly due to the low availability of quality options in these areas.
Shveta Jain, Director, Residential Services Cushman & Wakefield India said “The capital values across the city are expected to remain stable till the current levels of unsold inventory is reduced. New projects to be launched are likely to be concentrated in the locations of Goregaon and Mulund as there is an inherent demand for residential properties in these locations. The stipulations in the new Development Control rules (DCR) to charge a premium for the additional FSI and allocation of 20% area for the lower income groups will require the developers to revisit and revise their plans.”
PUNE
Pune recorded the highest number of units launched during the second quarter, estimated at 6,600; catering to the mid and high-end segments. Majority of the projects were concentrated in the western micro markets of Baner, Wakad and Chinchwad. The demand in these locations is generated due to their proximity to Hinjewadi and accessibility to the Mumbai-Pune Expressway. Buoyancy in demand in the established micro markets of Koregaon Park (high-end) and Kalyani Nagar (mid segment) resulted in capital value appreciation of 3-7% over the previous quarter.
Shveta Jain,, Director, Residential Services Cushman & Wakefield India said “Given the strength of the local markets in Pune, the mid segment properties across the city are expected to record appreciation in capital values while the rental value are likely to remain stable. This strength is derived from a reasonable mix of product ranges that cater to demand emanating from those employed in the city’s manufacturing, engineering, IT/ITeS and defence establishments.”
BENGALURU
Capital values of most residential markets in Bengaluru remained stable during the quarter. However, mid segment properties in South-West and North Bengaluru recorded the highest appreciation of 10% and 13% respectively. It was also noted that the high-end properties in Central & East Bengaluru saw increased interest from the Non Resident Indians who wanted to capitalise on the opportunity of the depreciating currency. This resulted in capital value appreciation by 11% and 7% respectively in these micro markets.
Shveta Jain, Director, Residential Services Cushman & Wakefield India said “The capital values are anticipated to remain stable across most micro markets. However, locations close to the IT hubs such as North, East and South-East are likely to appreciate marginally in the mid segment.”
CHENNAI
Demand for residential properties during the second quarter was stable though the number of transactions reduced in the last month. The total number of units launched during the quarter registered a decline of nearly 47%. Majority of the new launches was concentrated in GST Road and catered to the mid segment. Rental and capital values remained stable.
Shveta Jain, Director, Residential Services Cushman & Wakefield India “Rental and capital values are likely to remain stable in the next quarter across most micro markets. However, locations such as T. Nagar and R.A. Puram (including Alwarpet and Abhirampuram) may witness correction in capital values if the sales activities remain subdued.”
KOLKATA
A decline of approximately 29% in new launches has ensured that the right demand-supply balance is maintained. Affordable and mid segments housing have been witnessing healthy demand resulting in most of the new launches during the quarter catering to these segments. These projects were mainly concentrated in the peripheral locations of Mukundapur, Sonarpur, Nagerbazaar and Birati. Capital values remained stable across all micro markets as they are already at high price points. However, the prime South Kolkata locations of Dover Lane and Southern Avenue recorded marginal appreciation because of their inherent demand.
Shveta Jain,, Director, Residential Services Cushman & Wakefield India said “The demand for affordable and mid segment properties is likely to persist because of the demand-supply gap and may continue to witness launches in these segments. A few high-end projects are also planned and are likely to be launched in the latter half of the year as the economic conditions are expected to improve. Rents and capital values are likely to remain stable.”
HYDERABAD
Several projects have been pre-launched in the prime residential locations of Miyapur, Madhapur and Chandanagar. The demand in the residential market was positive as was evident from the enquiries and transactions by end-users and Non Resident Indians. The developers refrained from revising the prices to sustain the sales volumes.
Shveta Jain, Director, Residential Services Cushman & Wakefield India said “The relaxations provided in the G.O. 245 for LIG and EWS housing have been a relief to the developers. This is likely to provide the necessary impetus for the residential segment to witness more launches and improved demand by competitive pricing.”
