Global real estate consultancy Cushman & Wakefield, in its latest research on the residential markets of India, has reported a drop in total residential units launched in July-Sep 2014 of approximately 21 per cent as compared to the same time last year.
The study done for the top eight cities reveals that new launches in the affordable housing segment dropped by over 50 per cent in 3Q 2014 as against same time last year. 3Q 2014 saw the launch of 166 new housing projects across the top eight cities with Chennai recording the highest of 45 projects while Ahmedabad recorded the lowest of 5 projects.
The sharpest decline in launches was recorded in the affordable segment (52 per cent) 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 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 per cent while the high-end segment declined by only 10 per cent.
Shveta Jain, Executive Director, Residential Services, Cushman Wakefield, says, “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 reduced in number.
There is a conscious effort by developers to keep the number of 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.”
Shveta says, “The added disadvantage that many developers are facing is the dearth of land for development within reasonable city limits.
Factors such as pricing, development cost, cost of construction etc. have also seen some escalation in the last few years which have made developers choose their projects carefully.”
Beating the average national trend, Kolkata saw a significant rise in new launches in the quarter over same time last year. With 2,300 unit launches, market activity improved by around 28 per cent from the previous year.
The improvement was primarily due to developers’ increased focus on mid-segment offerings (85 per cent of total unit launches in Q3 2014 compared to 55 per cent in Q3 2013), which cater to a larger consumer base.
Pune also experienced a growth of about 18 per cent in total units launched in Q3 2014 over the same period last year due to 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 the wait-and-watch approach adopted by buyers in the past few quarters.
