Great ex­pec­ta­tions

Against the back­drop of a sta­ble gov­ern­ment at the Cen­tre, ac­tiv­ity in the hous­ing mar­ket across cities is likely to wit­ness im­prove­ment in the forth­com­ing months

HT Estates - - FRONT PAGE - Van­dana Ram­nani

Bo t h h o m e b u ye r s and de­vel­op­ers are hop­ing for a mar­ket re­vival. While the de­mand for res­i­den­tial units has re­mained sub­dued over the last six months due to sev­eral rea­sons such as high in­ter­est rates, in­fla­tion, de­pre­ci­at­ing value of the ru­pee and over­all slow economic en­vi­ron­ment, the new gov­ern­ment at the Cen­tre and the re­cent an­nounce­ments in the Bud­get are ex­pected to re­sult in in­creased ac­tiv­ity in the sec­tor in the forth­com­ing months.

De­mand for hous­ing across cities re­mained sub­dued in the first half of this year be­cause of high pric­ing and lend­ing rates. Home­buy­ers fo­cused on the sec­ondary and emerg­ing mi­cro- mar­kets and lead­ing cities. Res­i­den­tial dis­tricts across Delhi NCR, Hyderabad and Kolkata wit­nessed stag­na­tion in sales trans­ac­tions but growth in com­mer­cial ac­tiv­ity and grow­ing in­flux of IT pro­fes­sion­als pushed the hous­ing de­mand in Ban­ga­lore and Chen­nai, says a re­port ti­tled In­dia Res­i­den­tial View for the first half of 2014 by CBRE.

“Against the back­drop of a sta­ble gov­ern­ment at the Cen­tre and ex­pec­ta­tions of f aster de­ci­sion-mak­ing and pos­i­tive re­forms, ac­tiv­ity in the hous­ing mar­ket across lead­ing cities is likely to wit­ness im­prove­ment in the forth­com­ing quar­ters,” says Anshuman Mag­a­zine, chair­man and man­ag­ing direc­tor, CBRE South Asia Pvt Ltd.

He also ob­serves that while home­buy­ers have held of f pur­chase de­ci­sions in an­tic­i­pa­tion of low­er­ing in­ter­est rates, de­vel­op­ers are wait­ing for Di­wali be­fore launch­ing spe­cial schemes and dis­counts to boost sales.

Knight Frank’s In­dia Real Es­tate Out­look re­port on the res­i­den­tial and of­fice mar­ket per­for­mance of the Na­tional Cap­i­tal Re­gion for the pe­riod Jan­uary to June 2014, says that the new res­i­den­tial launches in the re­gion shrunk by nearly 43% in the first half of 2014, com­pared to the same pe­riod last year. In June 2014, nearly 1, 67,000 res­i­den­tial units re­mained un­sold in the NCR mar­ket and ab­sorp­tion lev­els wit­nessed a 37% drop dur­ing the first half of 2014.

“Al­though the NCR mar­ket is reel­ing un­der the pres­sure of un­sold in­ven­tory, we ex­pect it to gain mo­men­tum in the sec­ond half of 2014 post the in­cen­tives an­nounced in the Bud­get. As per our fore­cast, new launches will in­crease by 10% to 37,000 units in the sec­ond half com­pared to the same pe­riod last year,” the re­port says.

De­spite weak­en­ing, res­i­den­tial prices have not spi­ralled out of con­trol. The weighted av­er­age res­i­den­tial ask­ing prices in the NCR have in­creased by 5%,from 4,195 per sq ft in the first half of 2013 to 4,400 per sq ft in the first half of 2014. De­vel­op­ers are per­sis­tent and con­tinue to launch pro­jects at higher prices, claim­ing higher in­put and bor­row­ing costs.

Go­ing for­ward, prices will in­crease by 2% in the sec­ond half of 2014 to 4,500 per sq ft, in view of the re­cov­ery in sales vol­ume.

Mu­das­sir Zaidi, na­tional direc­tor, res­i­den­tial agency, Knight Frank In­dia, says, “De­spite show­ing signs of weak­en­ing, the NCR mar­ket has been able to hold res­i­den­tial prices. How­ever, the growth in weighted av­er­age prices has dwin­dled sig­nif­i­cantly in the last cou­ple of quar­ters. De­vel­op­ers have taken cues from the weak­ened con­sumer sen­ti­ment and have been of­fer­ing schemes and free­bies to boost sales. Go­ing for­ward, we ex­pect prices to in­crease by 2% in the sec­ond half of 2014 in view of the re­cov­ery in sales vol­umes.

As far as cities across the coun­try are con­cerned, while the num­ber of new launches fell by 32% in the first half of 2014 com­pared to the first half in 2013, sales vol­umes dropped by 27% dur­ing the same pe­riod. All the cities wit­nessed a steep fall in ab­sorp­tion, in the range of 14 to 37% dur­ing the first half of 2014, with the Ben­galuru and NCR mar­kets fall­ing by the low­est and high­est rates, re­spec­tively.

The elec­tion re­sults, sops for the hous­ing sec­tor in the Union Bud­get and all the sub- se­quent de­ci­sions taken by the Cen­tral gov­ern­ment in or­der to re­vive the economic growth of the coun­try seem to have changed the home­buyer sen­ti­ments from neg­a­tive to pos­i­tive in the last three months. Sales vol­umes in Delhi NCR, Mum­bai, Ben­galuru, Chen­nai, Hyderabad and Pune are ex­pected to post a phe­nom­e­nal growth rate of 26% in the sec­ond half of the year com­pared to the same pe­riod last year.

Mum­bai and Ben­galuru are ex­pected to lead in the re­cov­ery of sales vol­umes, with 49% and 26% growth, re­spec­tively, dur­ing this pe­riod. In con­trast to this, the num­ber of new launches is fore­casted to re­port a sub­dued growth of 5% in the next six months. High un­sold in­ven­tory and the poor re­sponse to new pro­jects launched dur­ing the sec­ond half of 2013 and the first half of 2014 are ex­pected to de­ter de­vel­op­ers from launch­ing any fresh pro­jects in most of the cities dur­ing the sec­ond half of 2014. The only ex­cep­tion will be the NCR and Chen­nai mar­kets that may wit­ness a strong growth in new launches.

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