NBFC cri­sis bat­ters realty, home sales grow just 6% in 2018

HT Estates - - FRONT PAGE - Bidya Sa­pam [email protected]

MUM­BAI: Real es­tate devel­op­ers in 2018 shook off the pre­vi­ous year’s lethargy with 76% higher home launches, even as sales grew at a more se­date 6%, as a cash crunch in the lat­ter part of the year crimped a sus­tained re­cov­ery.

The surge in home launches—1,82,207 units across eight cites in­clud­ing Mum­bai, Bengaluru andtheNa­tional Cap­i­tal Re­gion (NCR)—came after a slump in 2017 when the sec­tor strug­gled un­der the im­pact of de­mon­eti­sa­tion and a tough real es­tate law, ac­cord­ing to the half- yearly In­dia Real Es­tate re­port by prop­erty con­sul­tancy firm Knight Frank In­dia.

Around 60% of homes launched in 2018 were priced be­low ₹50 lakh, Knight Frank said.

In newlaunches, Mum­bai­saw the sharpest growth of 220%, fol­lowed by Pune (157%), which Knight Frank at­trib­uted to suc- cess­ful im­ple­men­ta­tion of the real es­tate law in both these cities andtheSupre­meCour­tal­low­ing re­sump­tion of con­struc­tion in Mum­bai, over­turn­ing a Bom­bay high court ban that cited in­ad­e­quate dump­ing grounds in the city.

How­ever, sales did not pick up as ex­pected, de­spite a strong start in 2018, as the cri­sis at non- bank­ing fi­nan­cial com­pa­nies (NBFCs) to­wards the end of the year cast a shadow over hous­ing fi­nance. For full year, home­sales rose 6% to 242,328 units, pow­ered by strong de­mand for af­ford­able and mid in­come homes. Bengaluru saw the sharpest sales growth of 27%, fol­lowed by NCR (8%) on the back stronger sales trac­tion in Noida and Greater Noida.

“Sales in the third quar­ter of 2018 rose by15% but it con­tracted by 16% in the fol­low­ing quar­ter post the NBFC cri­sis,”said Arvind Nan­dan, ex­ec­u­tive direc­tor (re­search), Knight Frank In­dia.

Though un­sold in­ven­tory is down by 11% to 468,373 units in 2018, it has con­tin­ued to put pres­sure on home prices. Weighted av­er­age prices across the eight cities con­tinue to stag­nate with Mum­bai see­ing the steep­est fall of 7% while home prices in NCR and Bengaluru have im­proved by 2% on a year-on-year (y-o-y) ba­sis.

The ef­fects of the NBFC cri­sis will spill over to the next few quar­ters of 2019 both in de­mand and sup­ply, ac­cord­ing to Shishir Bai­jal, chair­man and man­ag­ing direc­tor, Knight Frank. “Mar­kets will re­main in a cau­tious mode be­cause of the up­com­ing gen­eral elec­tions and the af­ter­ef­fects of NBFC cri­sis through most of the first half of 2019. On the pos­i­tive side, the an­tic­i­pated down­ward revision of GST ( goods and ser­vices tax) on un­der- con­struc­tion houses should pro­vide a boost to the buyer sen­ti­ment,” Bai­jal said.

How­ever, com­mer­cial real es­tate seg­ment saw see a ro­bust growth, see­ing a record of­fice lease trans­ac­tions. De­mand con­tin­ued to out­pace sup­ply. By the end of 2018, around 46.8 mil­lion sq. ft were leased, the high­est space trans­acted in the last decade while fresh sup­ply stood at 36.9 mil­lion sq. ft.



Sales in the third quar­ter of 2018 rose by 15%

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