PRESS RELEASE

• A significant drop from 47 months of inventory overhang in Q4 2017
• NCR still constitutes 52 months’ inventory overhang; Bengaluru & Hyderabad at an all-time low of 17 months each
• Sales exceed the number of units launched the second year in a row
• property sizes across the top 7 cities shrink by 8% compared to 2017 & 19% since 2016

Mumbai, 15 January 2019: Despite all headwinds including the liquidity crisis in 2018, housing sales rose by 18% and new launches by 33% across the top 7 cities compared to 2017. Residential inventory overhang reduced to a year-low from 47 months in Q4 2017 to 33 months in Q4 2018 across the top 7 cities.

The DeMo effect in late 2016 had pushed up unsold inventory to 47 months in Q4 2017 from 40 months in Q4 2016. An inventory overhang of 18-24 months signifies a fairly healthy market.

“Having absorbed a lot of the impact of various structural changes, the Indian real estate sector seemed poised to grow from the previous year,” says Anuj Puri, Chairman – ANAROCK Property Consultants.

“However, the issue of stalled projects and liquidity crisis continued to confound the housing sector in 2018, though it continued its transition into a relatively more transparent and end-user driven market. End-users accelerated growth while investors shifted focus towards alternative asset classes such as commercial, retail and warehousing, which did fairly well during the year.”

“Builders very extremely cautious about launching projects to align supply with the existing buyer demand. This helped sales pick up momentum in 2018. Simultaneously, builders reduced the average property sizes to align their offerings with the highly-incentivized affordable housing bracket. The affordable segment spearheaded residential growth in 2018.”

Pan-India Inventory Overhang (in Months) *

Source: ANAROCK Research (*Months inventory measures how many months it will take for the current unsold housing stock to sell)

2018 New Launch Tracker

The top 7 cities recorded new unit launches of around 1,95,300 units in 2018 against 1,46,860 units in 2017. The affordable segment comprised the lion’s share at 40%. Major cities contributing to 2018 new unit launches included MMR, NCR, Pune, and Bengaluru, together accounting for 74% new supply.

• Bengaluru saw approx. 34,880 units launched in 2018 – a whopping 91% increase from 2017. More than 80% new supply added was in sub 80 lakhs budget segment.
• MMR added approx. 59,930 units in 2018, a yearly increase of 12% over the preceding year. Approx. 40% new supply was added in the affordable
• Chennai added a new supply of 15,680 units in 2018 compared to 7,940 units in 2017 – a massive rise of 98%. Approx. 49% new supply was added in the affordable
• Pune added 24,430 units in 2018, a significant increase of 29% over 2017. More than 90% new supply was added in sub Rs. 80 lakhs budget segment, out of which 52% comprised of affordable
• Hyderabad added 17,290 units in 2018, a significant increase of 43% over 2017. Approx. 58% new supply was added in the budget segment of Rs. 40- 80 lakhs in 2018.
• NCR added approx. 26,010 units in 2018, a yearly increase of 17% over the previous year. Approx. 47% new supply catered to the affordable segment
• Kolkata added approx. 17,290 units in 2018, a significant increase of 25% over 2017.
• 73% new supply was added in affordable segment.

City-wise Supply (In Units) and Y-o-Y & Q-o-Q percentage change
Cities Name	2018	2017	%Change (2017 Vs 2018)	Q4 2018	Q4 2017	%Change (Q4 17 Vs Q4 2018)
NCR	26,010	22,180	17%	8,800	3,770	133%
MMR	59,930	53,700	12%	16,590	12,050	38%
Bengaluru	34,880	18,290	91%	11,610	3,510	231%
Pune	24,430	18,950	29%	6,730	2,720	148%
Hyderabad	17,290	12,110	43%	3,940	3,700	7%
Chennai	15,680	7,940	98%	3,900	970	301%
Kolkata	17,080	13,700	25%	4,030	1,660	145%
Total	1,95,300	1,46,870	33%	55,600	28,380	96%

Source: ANAROCK Research

The GST Debacle Haunted 2018

GST on under-construction properties was a major hurdle in 2018, dissuading buyers from purchasing properties that fell under its gambit. The twin issues of stalled/delayed projects and financial stress within residential real estate augmented interest for ready-to-move-in properties with most buyers prefer to buy what they can see.

Shrinking Flat Sizes

Builders submitted to consumer demand and offered more property options in the affordable segment, along with an overall reduction in average property sizes across segments, to fit the affordability quotient. At the pan-India level, average property sizes in 2018 shrunk to 1,160 sq. ft. from 1,260 in 2017.

Surprisingly, Bengaluru saw the maximum decline of 13% in average property sizes in 2018, followed by MMR and Kolkata with 11% each. On a two-year basis, the decline in housing sizes was nearly 23% in most key cities, except in Chennai and Bengaluru.

Sales Exceeded New Supply

Another significant trend witnessed is that housing sales numbers have exceeded new launch supply consecutively in 2018. Prior to 2017, sales numbers were far lower than the new launch supply. This definitely indicates that the market is managing to shed unsold stock.

In the first three quarters of 2018, sales numbers rose q-o-q, but Q4 saw a mere 4% rise as against Q3 2018. Sales growth was essentially marred by the NBFC crisis in the last quarter of 2018.

Consolidation via mergers and acquisitions dominated all sectors including residential during the year, completely redefining the definition of ‘financial health’ among players. This trend will continue in 2019 as well.

2018 Housing Sales Tracker

Around 2,48,310 units were sold in 2018 with NCR, MMR, Bengaluru and Pune together accounting for 82% of the sales.

• Bengaluru recorded the highest jump in sales in 2018 as compared to other top cities. City sales increased by 33% – from 43,130 units in 2017 to 57,540 units in 2018 due to buoyant commercial activity and realistic property prices dictated by end-users.
• NCR housing sales increased by 18% – from 37,610 units in 2017 to 44,300 units in 2018. Despite rising sales, the region continues to grapple with the issue of stalled/delayed projects.
• Pune sales rose by 12% – from 30,730 units in 2017 to 34,460 units in 2018.
• MMR sales rose by 17% – from 56,970 units in 2017 to 66,440 units in 2018 – the highest number of units sold in 2018.
• Chennai sales declined by 17% over the previous year and were recorded at 11,340 units in 2018.
• Hyderabad sales significantly increased by 16% over the previous year with 18,630 units sold in 2018.
• Kolkata saw approx. 15,600 units sold – a yearly increase by 21% over 2017

City-wise Absorption (In Units) and Y-o-Y & Q-o-Q percentage change
Cities Name	2018	2017	%Change (2017 Vs 2018)	Q4-2018	Q4-2017	%Change (Q4 17 vs Q4 18)
NCR	44,300	37,610	18%	12,730	8,200	55%
MMR	66,440	56,970	17%	20,220	12,460	62%
Bangalore	57,540	43,130	33%	14,820	10,250	45%
Pune	34,460	30,730	12%	9,940	6,310	57%
Hyderabad	18,630	16,110	16%	4,990	3,920	27%
Chennai	11,340	13,680	-17%	3,290	2,600	26%
Kolkata	15,600	12,900	21%	3,860	2,400	61%
Total	2,48,310	2,11,130	18%	69,850	46,140	51%

Source: ANAROCK Research

Overall Unsold Inventory till Q4 2018

Unsold inventory declined by nearly 7% – from 7.26 lakh units in Q4 2017 to 6.73 lakh units in Q4 2018 and 14% from 7.90 lakh units in Q4 2016. An uptick in the traction of ready-to-move-in and nearing-completion properties helped developers clear their existing stock.

City-Wise Unsold Inventory (In Units) and Q-o-Q percentage change
Cities Name	Q4-2018	Q4-2017	%Change (Q4 17 Vs Q4 2018)
NCR	1,86,714	2,05,000	-9%
MMR	2,19,491	2,26,006	-3%
Bangalore	73,337	96,000	-24%
Pune	87,403	97,424	-10%
Hyderabad	25,956	27,289	-5%
Chennai	30,837	26,499	16%
Kolkata	49,471	48,000	3%
Total	6,73,208	7,26,218	-7%

Source: ANAROCK Research

Price Movement

Residential property prices across the top 7 cities increased by a mere 1-2% in Q4 2018 when compared to the previous year Q4 2017 – except Chennai, where prices decreased by 1% and Kolkata, where they remained stagnant.

City-Level Price Trend (INR/Sqft)
Cities Name	Q4 2018	Q4 2017	%Change (Q4 17 Vs Q4 2018)
NCR	4,565	4,520	1%
MMR	10,550	10,337	2%
Bangalore	4,925	4,810	2%
Pune	5,480	5,410	1%
Hyderabad	4,150	4,100	1%
Chennai	4,900	4,955	-1%
Kolkata	4,375	4,430	0%
Pan-India	5,564	5,509	0.01%

Source: ANAROCK Research

Outlook 2019

Despite the numbers suggesting a positive outlook for 2018, the picture may not be as rosy in at least the first half of 2019. The liquidity crisis – further aggravated by the NBFC issue – has caused mayhem in the industry and early 2019 will continue to see its spill-over effect.

Even while various reforms strove to eliminate unscrupulous players from the real estate ecosystem, the issue of stalled projects needs to be seriously addressed by the Government, or else the recovery of the residential sector will remain compromised.

If developers continue to focus squarely on their core business, remain customer-centric and launch the right products at the right prices in 2019, the residential segment will gain traction. Else, the sector will have to solely rely on petty sops offered by the Government to intermittently boost sales.