Track2Realty: Cushman & Wakefield in their latest research on the residential markets of India have reported a drop in total residential units launched in 3Q 2014 (July – Sept.) of approximately 21% as compared to same time last year.
The study done for top eight cities of India reveals that new launches in affordable housing segment dropped by over 50% in 3Q 2014 as against same time last year – all housing segments registered a decline. 3Q 2014 saw the launch of 166 new housing projects across the top eight cities with Chennai recording the highest with 45 projects while Ahmedabad recorded the lowest number of new launches of 5 projects in the quarter.
Delhi-National Capital Region (NCR) saw a decline of 54% in new residential launches of approximately 4,500 units in 3Q 2014 as compared to the same time last year. Unit launches decreased as developers focused on completing existing projects (in the wake of significant unsold inventory) and delayed new launches awaiting an increase in demand.
| Segment wise Residential Launches (Y-O-Y) | |||
| Segment | Q3 2014 | Q3 2013 | Y-o-Y % Change |
| (No. of Units) | (No. of Units) | ||
| Affordable | 4,700 | 9,800 | -52% |
| Mid | 21,400 | 25,000 | -14% |
| High-end | 8,100 | 9,000 | -10% |
| Luxury | 400 | Nil | NA |
| TOTAL | 34,600 | 43,800 | -21% |
Source: Cushman & Wakefield research
The sharpest decline in launches was recorded in the affordable segment which declined by 52% in Q3 2014 as against Q3 2013. While the demand remains the highest in this segment, this is not the segment that developers prefer due to the larger scale of construction and management apart from the fact that input cost for development have started to inch upwards making it tougher for developers in the key cities of India to provide affordable housing within the city limits or even in the peripheral region.
Mid segment, which is traditionally the highest proportion of new launches, saw a decline of 14% in the time frame Y-o-Y while high end segment declined by only 10%.
Shveta Jain, Executive Director, Residential Services, Cushman & Wakefield India said, “Supply outstrips demand in most of these cities due to weak market sentiments and slower growth rate in sales due to which new launches have remained checked. There is a conscious effort by developers to keep the number units low thereby making smaller sized projects to help them deliver on time and meet the expectations of the purchasers. This in turn has been instrumental in keeping the prices stable in the market allowing the market to remain positive.”
| City wise Residential Launches (Y-o-Y) | |||||
| City | Q3 2014(
No. of Units) |
Q3 2013
(No. of Units) |
Y-o-Y Change | ||
| Ahmedabad | 800 | 2,100 | -62% | ||
| Bengaluru | 9,700 | 13,200 | -27% | ||
| Chennai | 4,400 | 4,100 | 7% | ||
| Delhi-NCR | 4,500 | 9,700 | -54% | ||
| Hyderabad | 2,000 | 1,900 | 5% | ||
| Kolkata | 2,300 | 1,800 | 28% | ||
| Mumbai | 6,400 | 7,200 | -11% | ||
| Pune | 4,500 | 3,800 | 18% | ||
| Total | 34,600 | 43,800 | -21% | ||
Source: Cushman & Wakefield research
Shveta further said, “The added disadvantage that many developers are facing is the dearth of developable land within reasonable city limits. Factors such as land pricing, development cost, cost of construction and material etc. have also seen some escalation in the last few years which have made developers choose their projects carefully.”
Beating the average national trend, the locations of Kolkata saw a significant rise in the new launches in the quarter over same time last year. With 2,300 unit launches, market activity improved by around 28% from the previous year. The improvement was primarily due to developers’ increased focus on mid segment offerings (85% of total unit launches in Q3 2014 compared to 55% in Q3 2013), which cater to a larger consumer base.
Pune also experienced a growth in total units launched of about 18% in Q3 2014 over the same period last year due to reasons of festive season demand. Many projects previously in the pre-launch stages were added to the market ahead of the festive season. The increase was primarily due to an anticipated improvement in demand amidst higher enquiries, signalling an end to wait-and watch approach adopted by buyers for the past few quarters.
With approximately 800 units launched in the third quarter of 2014, Ahmedabad recorded a decrease of nearly 62% in total new units launched in 3Q 2014 as against the same time last year primarily due to the fact that developers preferred to defer their new project launches in the wake of existing high levels of unsold inventory.
