Track2Realty: An increase in the number of enquiries for residential properties has been seen across the major cities. However, transaction volumes have not improved much. Restricted sales transactions were observed in major cities like Mumbai, Delhi, Gurgaon and NOIDA during 1Q 2014, as per a report by Colliers International.
New project launches saw a sharp decline except in cities like Chennai, Bengaluru and Pune, which have seen ample new project launches. Developers have continued offering buyback schemes and possession-linked payment plans to provide much needed comfort to buyers. Capital values remain stable in most cities; however select micro markets with inherent demand witnessed increases in the range of 2-5% QoQ.
Mumbai witnessed increase in capital values in the central and western Suburbs rose in the range of 1 – 9% QoQ. However micro markets, like Colaba, Cuffe Parade and Powai, witnessed a decline in the range of 3-5% QoQ. Leasing market leasing market slowed in both Mumbai and Delhi considerably due to limited hiring by multinational companies and embassies. With tenants getting more cost conscious, landlords were more open to rent negotiations.
The decreasing demand and cost optimisation from corporations have prompted landlords to lower their rent expectations in order to secure tenants. This quarter, rents for prime residential properties witnessed a decline in the range of 6% to 10% in Delhi and 1 to 7% in Mumbai respectively.
In the suburban market of Gurgaon and NOIDA limited project launches were witnessed. The developers have not reduced sales prices in their newly launched projects; however, they were offering innovative payment plans such as partial payment on possession and buyback options to generate sales amid waning demand.
In the secondary market there was a downward pressure on capital values, however asking prices were remained stable. Chennai and Bangalore observed an increase in launch of premium and mid-range projects in 1Q 2014. Steady demand for residential properties was seen during the quarter. Both the cities witnessed increase in capital values in the range of 2 to 5% QoQ.
In Kolkata, end-users remained the primary demand generator in the primary residential market. Micro markets like Rajarhat, EM Bypass, New Town and Baguihati remained the preferred locations due to proximity to employment hubs, affordability and upcoming infrastructure.
Pune witnessed restricted demand from speculators and investors have been seen in the premium and mid-range residential segments; however end-user demand remained positive. The capital values in all micro-markets increased in the range of 2-4% QoQ. However, the remaining micro-markets like Deccan, Camp and Boat Club were stable.
Says Joe Verghese, Managing Director, Colliers International, “The market sentiments are up due to clear majority in election results. Absorptions are likely to pick up in anticipation of possible price increase in future with a stable and pro-development central Government in place. Developers awaiting long are expected to launch new projects in coming months. Prices are expected to remain stable in near term however; there will be upward pressure in the medium terms due to increased demand.”
With the new Government in place and business confidence is gaining a momentum, we anticipate an increase in residential sales in the coming quarter. The BCI (Business Confidence Index) rose to 54.9 during 4Q 2013, from 45.7 in the previous quarter showing an increase in business confidence levels. The International Monetary Fund (IMF) has projected 5.4% GDP for 2014, presenting a positive outlook for the Indian economy. We are expecting a stable outlook for capital values in the near term; however, there will be upward pressure in the medium to long term due to increased demand.
