Chennai Saw Highest Housing Sales Dip In 2017, Bengaluru Lowest – ANAROCK Report
Unsold inventory decreased by 10% from 8.04 lakh units in Q4 2016 to 7.27 lakh units by Q4 2017
Mumbai, 22 March 2018: Fewer launches, subdued sales and muted property prices defined 2017 for the Indian residential real estate sector, according to a detailed report by ANAROCK Property Consultants.
With an annual decline of almost 50% in new launches and 15% decline in sales across top 7 cities in India, the sector was effectively shattered in 2017.
“A spate of policy reforms and structural changes literally crippled the sector,” says Anuj Puri, Chairman – ANAROCK Property Consultants. “Simultaneously and consequentially, it transitioned rapidly into a transparent and buyer-friendly one. With only end-users left to drive the market and investors more or less evaporating completely, developers throttled back severely on new launches to allow the market more scope to absorb the already staggering unsold inventory.”
2017’s Depressed New Launch Readings
The top 7 cities recorded new unit launches of around 26 lakh in 2017 as opposed to 2.50 lakh in 2016.
Gachibowli in Hyderabad is a market comprising of a 15 km stretch from Nallagandla-Tellapur along the Financial District, Nanakramguda, Kokapet, Narsingi, Raidurg up to Manikonda.
Recognized as one of the popular IT-ITeS and BFSI hubs of Hyderabad, Gachibowli has emerged as a sought-after destination for commercial office spaces as well as residential developments.
Gachibowli falls in the western periphery of Hyderabad and was once a far-flung region with minimal development and almost negligible residential activity.
However, it has witnessed a tremendous transformation in terms of commercial and residential real estate activity driven primarily by the many major IT-ITeS companies now operating there.
Only 6 km from HITEC City, Gachibowli has ICICI, CMC, Franklin Templeton, UBS, Cognizant, IBM, Microsoft, Infosys and many other large firms driving multi-faceted real estate demand. As a result, it has emerged as a top employment destination in Hyderabad and attracts working professionals from various parts of India.
These commercial office developments have attracted residential developers to come up with projects in the nearby micro-markets, and now the region is booming with massive real estate activity.
From observing residential market trends over the past five years, it clearly emerges that 2013-14 was the last year where things still looked vibrant for the sector. Housing sales began plummeting after that, and there is no clear revival in sight as yet.
A quick trends assessment for the past 5 years reveals that during 2013-2014, an average of 3.3 lakh units was sold annually. Thereafter, with too many project launches facing off with decreasing demand, unsold inventory began piling up across the top 7 cities of India.
Housing sales dropped significantly in the 2015-2016 period. On an average, only 2.7 lakh units were sold across top 7 cities of India during 2015-16, recording a significant drop of 17% from the average sales of 2013-14.
When demonetization hit the nation during the 4th quarter of 2016, the situation turned from grave to savage. Immediately after the demonetization impact, the real estate sector was battered with RERA and GST which severely shook up the sector.
Chennai, the capital of Tamil Nadu, is one of the biggest cultural, economic and educational centres in South India.
Mercer’s Quality of Living Survey noted Chennai as the safest city in India and is exemplified by the fact that it has the third-largest expatriate population in the country.
Also justifiably called the ‘Detroit of India’, Chennai has over one-third of India’s automobile industry operating there.
Chennai has grown significantly in the last few years. Education prospects and employment opportunities, along with a decent lifestyle, are the key drivers that attract people to the city.
With increasing population, the city’s real estate landscape has also grown by leaps & bounds and is now spread across various zones of Chennai.
Whilst the real estate development paused momentarily due to massive floods of 2015, the fundamental demand drivers remain intact and the city is likely to continue on its growth trajectory in the future periods, reinforced by:
Diversified economic base
Chennai’s diversified economic base is anchored by the automobile,
Ready Reckoner (RR) rates indicate the value of land or residential and commercial properties of an area determined by the state government and are published annually.
RR rates vary as per the area under consideration and the available infrastructure facilities. They have an impact on the stamp duty on property transactions, and concurrently on the revenue mop-up of the state government.
They also directly impact the market value of the properties. Change in the RR rates also influences the real estate construction cost and additional charges towards any transaction.
Pune’s RR Rates
The RR rates of Pune are proposed to be hiked by 3% this year, and the final announcement is expected to come by April 1, 2018.
The proposed hike is marginal compared to the previous years – the rates were increased by 13% in 2010, in 2011 by 27%, in 2012 by 17%, in 2013 by 12%, in 2014 by 13%, in 2015 by 15% and in 2016-17 by 7%.
As per the governing authority, the hike was based on detailed surveys undertaken by the town planning department.
Traditionally, the Gudi Padwa festival season is an auspicious time to invest in real estate. Considered a time of renewal, it coincides with Punjab’s Baisakhi, Tamil Nadu’s Puthandu, Andhra Pradesh’s Yugadi and Kerala’s Vishu.
Since a large cross-section of Indians tends to link property acquisition with auspicious dates, activity levels on the property market tended to increase visibly in this period.
However, Gudi Padwa 2018 is not likely to bring the accustomed uptick, which – though almost non-existent even in the last 2 to 3 years – arrived in the backdrop of a more complex set of challenges than ever before. This year, this festive season will be juxtaposed with some interesting market dynamics.
The residential real estate market in many cities has been slowing down, and developers are hoping that Gudi Padwa will prove to be a turning point for many developers who have been struggling with slow sales as well as policy-induced compliance pressures and generally negative market sentiment.
Indian developers tend to look at the tradition-fuelled appetite for housing purchases during festivals like Gudi Padwa so as to mitigate slow sales during the rest of the year and offer lower prices under the guise of festival discounts.
Real estate prices in Mumbai – India’s high-flying financial capital – are never out of the news.
From South Mumbai’s spectacularly pricey trophy properties to the chronically unaffordable price tags of what passes for mid-income and affordable housing in the city, there is no getting over, under, around or through the extremely high property prices in Mumbai.
Mumbai’s sky-high real estate rates – what lies beneath?
Before we go into which parts of Mumbai can still reap decent returns on real estate investment, it is important to understand why the city was such an investment hotbed in previous years – and in fact still draws patient, well-capitalized investors.
Of course, the city’s extremely steep capital and rental values were (and continue to be) their primary incentive. There are several reasons for Mumbai’s exorbitant property prices – some are logical and have to be accepted as facts of life here, while others have more to do with unabashed market manipulations.
Its unique geographical attributes have been one of the leading factors influencing the astronomic property prices in Mumbai.
One of the interesting new trends in Kolkata’s residential real estate market has been the entry of new players. The capital values of residential realty have seen a price increase in Q4-2017 ranging from 2 to 3% as compared to Q3-2017.
A number of upscale multi-storied projects were launched in 2017 in the southern part of the city – for e.g. Tata 88 east, Mani Vista, Signum Victoria Vistas, Aspirations Elegance and Onex Privy. The capital values of these projects were in the range of INR 8,000 to 12,000/sf.
Effect of demonetization
As everywhere else in the country, demonetization had some effect on Kolkata’s residential sector. However, since Kolkata’s residential sector is largely end-user driven, the effect of demonetization was not very severe, as the buyers are willing to wait for the market to stabilize.
In the office asset class, there has been no major impact due to demonetization. However, leasing demand has certainly reduced post-demonetization.
Top-selling residential projects
Kolkata’s residential property market is seeing a splurge in supply – which,
The Golf Course Extension Road has emerged as one of the most sought-after residential corridors of Gurugram.
While not being priced as high as the neighbouring Golf Course Road, it offers multiple apartment options for the upper-mid segment moving up the value chain to luxury housing options as well.
This residential corridor has seen more than 8,500 residential apartment units launched overall, and many of them are in advanced stages of construction. Around 2,500 residential units have been delivered here with another 2,600 slated for completion by 2019-end.
This residential market has a good mix of end-user as well as the investor segment who have in the past achieved healthy capital appreciation across their investment/purchases. The healthy completions pipeline had also resulted in a robust secondary sales market in this corridor.
The consistent price appreciation on Golf Course Extension Road caused sales to dampen slightly, and the overall slow market for high-ticket sized apartments has also impacted the sales velocity in this corridor.
Nestled in the foothills of Aravalli – one of the oldest range of folded mountains in India – Sohna was for long a major tourist attraction due to its lakes, hot springs, temples and many places of historical importance.
Located in the southern part of Gurugram, Sohna is also popularly known as ‘South Gurugram’. In the last few decades, Gurugram’s unprecedented economic growth has led to accelerated urbanization and rapid growth in migrant population flocking the city for employment.
Over time, the fast-paced growth in key areas such as MG Road, Udyog Vihar and Cyber City has created a ripple effect and pushed developments towards the western and southern parts of the city. This led to the emergence of new areas such as Golf Course Road, Golf Course Extension Road, Southern Peripheral Road (SPR) and Sohna Road – leading right up to Sohna town.
With proximity to various business centres and industrial clusters, good overall accessibility, affordable prices and planned infrastructure upgrades, Sohna is evolving as a key real estate destination for the working population of Gurugaram and surrounding regions.