DEMAND FOR HOUSING WEAKENS
Reasons? High vacancy levels and interest rates
Slowing economic growth, coupled with high property prices and steep interest rates resulted in weak demand for housing during the second half of 2013, according to CBRE’s bi-annual India Residential Market View report for the second half of 2013.
High vacancy levels and rising construction costs led to a slowdown in construction activity, causing a decline in new launches, and further delay in project completion timelines.
Liquidity i ssues and an increasing inventory caused developers to shift their focus from new launches to the completion of existing projects, although delays i n project execution continued to remain an over-riding concern in most emerging housing markets. Developers reduced prices across select projects and offered discounts or marketing promotions to attract buyers.
While the premium housing segment saw a steady interest from high net-worth individuals (HNIs) and non-resident Indians (NRIs), end-user demand in the high-end and mid-end segments remained low. The depreciating rupee, which tumbled to a series of record lows during 2013, resulted in an increase in NRI enquiries for property in India.
According t o Anshuman Magazine, chairman and managing director of CBRE, South Asia Pvt Ltd, “Homebuyer sentiments remained cautious and subdued due to high price points, with preferences shifting to secondary and emerging micro-markets of leading cities. Housing demand in the highend and mid-end, as well as in the luxury segment, is likely to remain sluggish across India’s leading cities during the first half of 2014, due to the subdued, pre- election macro- economic environment.”
The former chief minister of Delhi has signed a 11-month rental agreement for a 2,000 sq ft three bedroom flat on the fifth floor of Silver Arch apartments