Apartment sales exceeded launches in ’16

The number of residential apartments sold were higher than new units launched in all four quarters of 2016.

“This sales trend continued through first quarter (Q1) of 2017 across India and is expected to last for another couple of quarters even as RERA kicks in and businesses prepare for the implementation of the GST,” said Ramesh Nair, CEO & Country Head - JLL India.

“With traditional cash flows during a project’s life cycle changing due to an evolved policy framework and compliance, developers are changing their business models as well,” he added. Confirming the developments, Ramita Arora, Senior Director, City-Head, Cushman & Wakefield, said the main key driver is the mid-housing segment. This segment saw more than three-fold increase in number of residential units in Q1 2017 as compared to the last quarter of 2016, he said.

Nair, comparing these five quarters, said the number of units sold vis-à-vis number of new units launched was the highest in 3Q16 – when it exceeded new launches by more than 10,000 units at a pan-India level.

“In the fourth quarter last year, demonetisation slowed down speculator activity and from then on, sales have been largely driven by end users. Developers have rediscovered the value of end users and have been right-sizing and right-pricing their offerings accordingly,” he said.

The ongoing slowdown in new unit launches has led to the industry witnessing consolidation, which is expected to continue in the coming years.

AS Sivaramakrishnan, Head, Residential Services – India, CBRE South Asia, said, “As the government provides incentives to lower-priced units, LIG and MIG segment apartments are likely to witness high demand. On an annual basis, the cities of Mumbai, Bengaluru, Chennai and Pune are expected to witness an overall stability in housing sales by the end of 2017.”

“Our in-house data analysis shows that residential properties up to ₹35 lakh price bracket accounted for majority of the sales in at least four out of seven major Indian cities last year. The trend stood true in metros as well as smaller cities,” said Shishir Baijal, CMD, Knight Frank India.

“Interestingly, the trend is clear across all the metros – Delhi-NCR, Mumbai, Bengaluru and Chennai while the difference is negligible in Kolkata. Although the number of new unit launches looks greater than units sold in both Pune and Hyderabad, a closer look reveals the true picture,” Nair said.

In Pune, even as the units launched reduce marginally every quarter, these are largely in the city’s fringe areas. In Hyderabad, launches are expected to stabilise through 2017 because a significant increase in launches could lead to unsold inventory piling up, he added.