New home launches plunge 78% in 2017

Housing Sales Down 6% In NCR Supply Falls 56% Knight Frank

According to Samantak Das, chief economist and national director at Knight Frank, this 5 per cent drop in prices effectively translates to a total cost benefit of 11 per cent to 12 per cent for home buyers in Mumbai. However, the July-December sales figures of these cities in 2017 were still significantly lower than the second half of 2014 and 2015, clearly depicting an underlying declining trend, the report said. Even though the average price of the residential weakened by 3 percent due to developers offered discounts, many units remain unsold.

"Apart from the base price reduction, which developers have been forced to undertake in order to prioritise offloading inventory level, a bouquet of incentives such as waivers, free of charge floor rise and assured rental schemes, which are available a dime a dozen in the market lends significantly to the price advantage", said Das. Approximately 37,653 units were sold in NCR a year ago, a drop of 6% from 2016.

"Select markets wherein Rera has matured, have seen developers re-launch projects at attractive prices which led to an uptick in sales in 2017".

Little wonder then that residential sales in the Mumbai Metropolitan Region (MMR) jumped up 19% in the second half of past year compared to the same period in 2016. But from the sales peak of 2011 when 3,68,568 units were sold, this is a step decline of 62 per cent in 2017 at 2,28,072 units.

"At the end of 2017, India's residential sector appears to have shrunk to a fraction of its size in less than a decade". "Collectively discounts add up to 11-12%", the report said.

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The stagnation in the market, according to the report, is owing to ambiguity over Real Estate (Regulation and Development) Act and concerns of job security in IT sector. "From an annual perspective 2017 saw 32% fewer launches YoY and new projects and same was down by staggering 83% from peak in 2010", as per the report.

Meanwhile, Chennai city's office space market also plummeted as the share of largest office space consumer, IT and ITeS sectors, halved from 43 percent in second half of 2016 to 25 percent in second half of 2017. The age of unsold inventory is a matter of concern, said Krishnan.

New launches across the eight key metros of Mumbai, Delhi-NCR, Bengaluru, Pune, Chennai, Hyderabad, Kolkata and Ahmedabad, declined 41 per cent in the second half of 2017 to 40,832 units from 68,702 units in the same period in 2016.

"The office market has witnessed newfound buoyancy with new completions recording double digit growth for the first time since 2012".

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