Few takers, but home prices are not falling

HARD REALTY New launches are declining as developers grapple with unsold units; focus shifting to ‘affordable’ segment

NEW DELHI: Kapil Khurana, 40, has been hunting for a house in Gurgaon for two years, with little luck. Sky-high prices and interest rates have meant that he is still looking.

Real estate developers have been vocal about dwindling sales, but serious buyers say there is nothing available at reasonable prices.

DLF, one of the country’s leading real estate players, has reported a decline in sales at 350,000 square feet at the end of the December quarter. In tandem, housing property sales in Gurgaon, which is DLF’s main market, reported a 55% drop in 2014 at 10,887 units compared to 24355 units sold in 2013.

Noida too reported a 43% decline from 78,872 units in 2013 to 45,132 in 2014, real estate analyst Proptiger said in its latest report.

Unsold inventory too is on the rise. Mumbai, Thane and Navi Mumbai, for instance, had a total of 127,191 units unsold at the end of 2014. The figure in Gurgaon-Bhiwadi-Sohna was 45,087 units.

However, prices are unlikely to cool in the near term, industry sources said — a cause of worry for buyers.

Barring Noida, prices have only seen an increase, albeit marginal: 2% in Gurgaon, and 5% in Mumbai — the two most premium real estate markets in India.

The average rate for an apartment in Mumbai increased to `11,783 per square feet at the end of 2014, and to `7,737 in Gurgaon, from `11,226 and `7,613 at the Proportion of the unsold inventory that is more than 3 years old, with the maximum concentration in Noida and Mumbai

Share of unsold inventory that is in the affordable category (priced below `50 lakh)

New housing projects saw a bigger dip in sales at 75% in the last 7 quarters, vs

34% drop for projects older than 6 months New launches in top 9 cities* (Calendar year Jan-Dec)

2013 2014

`1 crore+ `75-100 lakh `50-75 lakh Unit sales in top 9 cities 2013 2014 The focus has firmly shifted to the ‘affordable’ segment

Big players such as Mahindra Lifespaces, Shapoorji Pallonji and Sobha Developers have opened affordable housing arms Affordable housing re-defined to include projects priced up to

`50 lakh, FDI rules relaxed beginning of the year.

Analysts say high prices continue to be a road block in these two markets.

“Residential sales declined by approximately 30% yearon-year by the end of 2014 in the seven leading cities of the country, largely due to high price points. The decline, which was

<`25 lakh `25-50 lakh noted across all major cities, was particularly steep in the Delhi-NCR. All major markets witnessed a slowdown in sales. Mumbai saw 7% increase over H1 2014, but a 2% decline on an annual basis,” said Anshuman Magazine, chairman and managing director, CBRE South Asia.

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