Note ban-hit NCR realty market likely to recover this year
The NCR residential market has been under pressure and 2016 was no different. The market, in a downward slide since 2010, hit a new low with every passing year. In the first half of 2016, other major cities in the country fared well but NCR was the worst performing market. In the second half of 2016, the market witnessed negative demand and supply went down by 29% and 73%, respectively, compared to the same period in 2015.
As far as the new launches are concerned, on a yearly comparison, those in the NCR market dwindled to 26,735 units in 2016 registering a year-on-year 58% drop from 2015. The festive season failed to infuse any life in the dull market and sales further fell to 40,005 units in 2016 from 48,800 units in 2016, registering a year-on-year drop of 18%, says a recently launched report titled India Real Estate by Knight Frank India.
Piling up inventory, lack of consumer confidence due to litigations and infrastructure delays were some of the major factors that have decelerated new launches in NCR. The market dynamics have become such that today only a ready-to-move-in property attracts the buyer. The largest urban agglomeration of the country has the highest unsold inventory under different stages of construction, but is still struggling to find buyers. If this was not enough, the partial implementation of the Real Estate (Regulation and Development) Act, 2016, in the first half of 2016 ,hit the sluggish market again. New launches came to a standstill with developers rushing to complete their pending projects. The rush stems from the fact that if a project is not completed before the full implementation of the Act, the promoter will need to get the project registered with the authority and then complete it within the stipulated time, says the report.
As per the survey, the market did start giving indications of marginal recovery in the third quarter owing to developments like project deliveries, reduction in prices and improving infrastructure in places like Noida Extension and Noida–Greater Noida Expressway. Although the third quarter numbers for NCR were not very encouraging when compared to the peak of 2012, some prominent developers, especially in Noida and Greater Noida, registered a slight increase in their sales in the third quarter of 2016 as compared to the same period in 2015, thereby indicating improving market sentiments. Instances like sale of units of over ` 3 billion on the first day of the launch of a 100acre township in Greater Noida was a testament to the improving sentiments.
However, the most recent move by the government on November 8 to clamp down on black money nipped this market sentiment in the bud and has brought the NCR real estate market to its knees.
The fourth quarter numbers are evidence to the impact of the demonetisation. Sales volumes dropped by 53% year-on-year and new launches fell by a massive 73% during the same period. At only 6,765 units, the sales volumes are at their lowest quarterly levels since 2010, down by 79% since the quarterly peak of 31,990 units in the fourth quarter of 2010.
The new launches have fared much worse at just 3,710 units in the fourth quarter of 2016, which is 91% lower than the peak of 40,136 units witnessed in the same period of 2010. As the sales number for the first nine months had shown an optimistic trend, 2016 would have been at par with 2015 had it not been for the demonetisation move. The new launches in NCR have come down to a staggering 9,273 units in the second half of 2016 registering a year-on-year drop of 73%.
SALES VOLUME CAME DOWN BY 53% YEARON-YEAR IN THE FOURTH QUARTER OF 2016. NEW LAUNCHES FELL BY 73% IN THE SAME PERIOD
Piling up inventory and infrastructure delays have decelerated new launches in NCR.