New launches de­cline; de­vel­op­ers fo­cus on com­plet­ing projects

The im­pact of the Real Es­tate Reg­u­la­tory Au­thor­ity (RERA) will keep new hous­ing project launches fur­ther in check, as de­vel­op­ers will aim at com­plet­ing projects to boost cash flows as most projects have con­struc­tion linked pay­ment plans, says a re­port

HT Estates - - HTESTATES - HT Es­tates Cor­re­spon­dent

Deve l o p e r s i n N C R fi­nally gave in to price re­sis­tance. Prices reg­is­tered a 4% year-on-year dip in the first half of 2016 and cor­rected to 2013 lev­els. Pil­ing-up in­ven­to­ries and a slow sales ve­loc­ity brought stag­nancy in the mar­ket, wherein de­vel­op­ers could not in­crease prices sub­stan­tially. The mar­ket, al­ready in a time cor­rec­tion phase for the last three years, has for the first time reg­is­tered a de­cline in quoted prices in NCR, a Knight Frank re­port said.

Cash- strapped de­vel­op­ers are con­cen­trat­ing on com­plet­ing their ex­ist­ing projects to boost cash flows, since most of the projects have a con­struc­tion­linked pay­ment plan.

This has pushed de­vel­op­ers to bring down prices and re­strict new launches in the first half of 2016, re­sult­ing in the thinnest half yearly sup­ply ob­served in NCR.

Nose-div­ing to 17,462 units in the first half of 2016, new launches reg­is­tered a mas­sive 41% dip year-on-year com­pared to the first half of 2015. New launches have also shrunk be­cause present-day home­buy­ers pre­fer to buy a com­pleted apart­ment, which is push­ing de­vel­op­ers to speed up com­ple­tions rather than launch new projects.

The fear of le gal ac­tion un­der Real Es­tate Reg­u­la­tory Au­thor­ity ( RERA) Act have also caused de­vel­op­ers to con­trol the launch of new projects and con­cen­trate more on project com­ple­tions. Un­der this law, all real es­tate projects (in­clud­ing those un­der con­struc­tion) for which a com­ple­tion cer­tifi­cate has not yet been is­sued have to be re-reg­is­tered with the real es­tate reg­u­la­tor.

De­mand and sup­ply have reached the in­flec­tion point in the first half of 2016 in NCR, with de­mand out­strip­ping sup­ply for the first time. This muchawaited tran­si­tion phase hints at a mar­ket cor­rec­tion in NCR’s real es­tate sec­tor, go­ing for­ward.

New launches in NCR have been on a con­stant de­cline since 2010 and have dropped more than half over the last six years. This rad­i­cal drop can be ex­plained by the poor con­sumer con­fi­dence that has in­hib­ited de­vel­op­ers from launch­ing new projects.

De­mand on the other hand has also shrunk, but it is too early to state the trends as the new base for sales. With specu- la­tive in­ter­est wan­ing in the mar­ket, sales in NCR are driven pri­mar­ily by end-user de­mand.

Re­cent trends sug­gest that sales in NCR have re­mained be­low 30,000 units in the first halves of 2014 and 2015, com­pared to 50,000 units 2010 and 2011. The mar­ket reg­is­tered sales of ap­prox­i­mately 23,092 units in the first half of 2016, com­pared to 25,000 units in the first half of 2015.

Along with the im­pact of macroe­co­nomic fac­tors, de­lays in the de­liv­ery of some ma­jor large-scale projects, de­faults by de­vel­op­ers, and lit­i­ga­tions in­volv­ing ma­jor in­fra­struc­ture projects have put buy­ers in NCR on the back­foot.

While new launches dropped by a stag­ger­ing 41% year-onyear in the first half of 2016, Greater Noida, with 7,690 and Gur­gaon with 7219 launches saved the day for NCR ac­count­ing for over 80% of the to­tal launched units in NCR.

Noida wit­nessed new launches drop by al­most half, to 2,210 units in the first half of 2016 as com­pared to 4,464 units in the first half of 2015, thus reg­is­ter­ing a dip of 53%.

In­sights sug­gest that the in­crease in the land al­lot­ment rates by 14.19% by the New Okhla In­dus­trial De­vel­op­ment Au­thor­ity ( NOIDA) Board will cur­tail new launches in the re­gion even fur­ther, since de­vel­op­ers are al­ready fac­ing a liq­uid­ity crunch due to poor sales.

The pro­posed exit pol­icy for de­vel­op­ers in Noida fur­ther cor­rob­o­rates the fact that de­vel­op­ers are nei­ther able to com­plete their cur­rent project phase nor are in a po­si­tion to launch new projects, given the cur­rent sales and liq­uid­ity crunch.

As many as 72% of the new launches in NCR in the first half of 2016 are in the sub-₹50 lakh cat­e­gory, in­di­cat­ing a move to­wards af­ford­able op­tions for home­buy­ers.

Ca­ter­ing mostly to the af­ford­able and bud­get seg­ments, the max­i­mum num­ber of new launches in Greater Noida fall in ₹ 50 lakh cat­e­gory. In keep­ing with this trend, all new launches in Greater Noida in the first half of 2016 were in the sub a ₹ 50 lakh cat­e­gory.

Ap­prox­i­mately 23,092 units were sold in the first half of 2016, com­pared to 25,000 units in the first half of 2015, thus reg­is­ter­ing a year-on-year dip of 8%. Our sur­vey find­ings sug­gest that there is a grow­ing pref­er­ence among home­buy­ers for ready- to- move- in projects or projects where there is a cer­tainty of pos­ses­sion within a year. This grow­ing in­cli­na­tion is a con­se­quence of project de­lays and l ong ges­ta­tion pe­ri­ods in the com­ple­tion of in­fra­struc­ture projects.

Though the over­all sales vol­ume in NCR has re­mained muted for the past six quar­ters, Greater Noida and Gur­gaon have still man­aged to buck the trend in terms of sales in NCR.

De­mand in Greater Noida, i nclud­ing Greater Noida West, comes pri­mar­ily on the back of af­ford­abil­ity. Most of the cur­rent and new projects in Greater Noida fall in the sub-₹50 lakh cat­e­gory, which in­creases the at­trac­tive­ness of the area for buy­ers look­ing for af­ford­able op­tions.

I mprov­ing con­nec­tiv­ity be­tween Noida and Greater Noida through the Noida– Greater Noida Ex­press­way and the up­com­ing Metro has fa­cil­i­tated of­fice space move­ment along the ex­press­way, adding to pos­i­tive sen­ti­ments.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.