Around 1,62,000 new units were launched across the eight major cities of the country in 2012, and the majority were in the mid-end segment

Residential markets across major cities in India witnessed a drop of approximately 16 per cent in the total number of units launched in the year 2012. Around 1,62,000 new units were launched across the eight major cities. The majority (83 per cent) were in the mid-end segment.

With nearly 54,500 units, NCR constituted a majority (34 per cent) of the total number. Pune recorded the second highest number of fresh launches at 24,000, followed closely by Mumbai (22,500) and Chennai (20,800). Bangalore recorded a drop of 50 per cent in the number of new launches over the previous year.

The mid-end segment saw the highest number of launches of approximately 1,35,700 units, though it was lower by nearly 15 per cent over the previous year. Of the total mid-end housing units launched, NCR saw a total of over 50,000 units mostly concentrated in Gurgaon and Noida. High-end and luxury segment units saw a 24 and 23 per cent decline respectively over the last year. Mumbai witnessed the highest number of luxury unit launches (approximately 1,200) followed by Bangalore and Pune in 2012.

Majority of the launches were concentrated in the second half of the year owing to uncertainties over regulations (Development Control rules in Mumbai, G.O. 245 in Hyderabad and issues pertaining to land acquisition in NCR) being resolved and the advent of the festive season, a popular time for end-users to buy.


Sanjay Dutt, EMD, South Asia, Cushman & Wakefield, says, “In 2012 the residential market saw proactive and innovative marketing and the launch of specialist projects but restrained activities in terms of large-scale development, as most developers were cautious not to overestimate the end user demand market.

Aspects like high consumer inflation, existing high home loan interest rates and slower growth of the economy had a strong impact on the end users, making them more price sensitive than previously experienced. On the other hand, cash-strapped developers were not willing to take up projects that may fall short in interest from end users, thereby keeping their risk exposure to the minimum.”

With respect to Bangalore, it was a decline of 50 per cent over the previous year with 16,543 units in launched in 2012. The drop was mainly due to subdued demand which was recorded up to the first half of 2012. As a result, developers were cautious about launching new projects in a bid to avoid an oversupply situation. The maximum launches (75 per cent) catered to the mid-end segment while high-end and luxury units were launched more cautiously.

North Bangalore witnessed the maximum number of launches owing to availability of land coupled with improving infrastructure. The announcement of commercial projects such as KIADB Park, and Devanahalli Business Park as well as improving connectivity to the international airport resulted in the healthy demand for residential property in North Bangalore.

Realty Report

Knight Frank India’s Economy & Realty Report for December 2012 focuses on the Indian residential market scenario and the performance of the top six cities in the residential space. Following are some of the key takeaways:

*GDP growth declined from 9.3 to 6.5 per cent, crippling the residential sector. Launches declined by 30 per cent in 2012 compared to seven per cent in 2011 as banks' credit exposure to developers fell from 23.21 to a mere 3.88 per cent.

* The residential market in 2012 was plagued by high property prices, relatively higher mortgage rates, weak business sentiments and a bleak employment scenario which was reflected in the residential launches, which declined by 30 per cent in 2012 in comparison to seven per cent in 2011.

* Banks’ credit exposure to developers fell from its peak growth rate of 23.21 per cent in June, 2011, to 3.88 per cent as per the latest reported data in September, 2012.

* Developers are cautious of launching projects as the gap between the launch and the absorption numbers reduced to 32,000 units in 2012 compared to 82,000 and 94,000 units in 2010 and 2011 respectively.

* Residential sales momentum for the top-six cities fell by 14 and 16 per cent during 2011 and 2012 respectively. The two biggest residential markets i.e. NCR and Mumbai, accounted for almost 60 per cent of the total absorption followed by Bangalore (13 per cent), Pune (11), Chennai (9) and Hyderabad (7).

* Being an end-user driven market, Bangalore is expected to remain comparatively steady this year. The South-East and North-East areas will continue to lead the overall residential market. Controlled new supply will keep a check on the quantum of unsold inventory in 2013. Steady supply coupled with stable absorption will ensure the market’s health.