NCR sees 43% drop in home sales
2014 not great for Indian real estate, fall sharpest in NCR, says report
Residential sales d r o p p e d by 1 7 % across Mumbai, Delhi National Capital Region ( NCR), Bengaluru, Pune, Chennai and Hyderabad with NCR seeing the sharpest drop in home sales that was as high as 43%. The year 2015 will be the year of recovery and stabilisation, according to a Knight Frank India Real Estate Outlook.
“2014 has not been a great year for Indian real estate. It reflected a correction in stakeholder sentiments on the back of a slowing d e m a n d e nv i r o n m e n t . Residential sales across the top cities have dropped in 2014. While sales volumes fell by 17%, launches dropped by 28%,” says Shishir Baijal, chairman and managing director, Knight Frank India.
According to the report, NCR witnessed the sharpest fall in sales volume among all the six cities. Property sales fell by 43% year- onyear in NCR in 2014, followed by Hyderabad with 18%. Sales in Pune and Chennai declined by 10% and 14%, respectively, Mumbai by 9% and Bengaluru by just 3%.
New launches also saw a declining trend. They fell by 43% in Mumbai, followed by Hyderabad that saw a 30% drop. NCR saw a decrease of 24% in the number of project launches in 2014 compared to 2013, Bengaluru 13%, Pune 26% and Chennai 25%.
A severe fall in sales has resulted in a huge inventory pile-up with real estate developers. The NCR has 192,568 unsold residential units which will take approximately 14 quarters to sell (QTS); it means that if no further units are added, the current inventory will take 14 quarters to get sold. QTS is a ratio calculatedulated on the basis of average age sales for the last eight quarters divided by the outstandingstanding units on sale.
Mumbai has approximately 12 quarters of inventory, followed by Hyderabad with close to eight quarters and Pune, and Chennai and Bengaluru with seven quarters each.
“We expect 2015 to be the year of recovery and stabilisation. The current economic indicators look positive, though the real impact will only be felt by the second half of this year. A surprise rate cut from RBI has marked the beginning of the New Year and going forward, the Make in India campaign, REITs, FDI relaxation, and smart c i t i e s, a m o n g o t h e r s, augurs well for giving a much- needed boost to stakeholder sentiments,” Baijal said.
The office space segment, however, perf or med well during the year on the back of recovery in the domestic market.