Further interest rate cut in H2 unlikely: Colliers

Supply of new real estate projects will remain restricted in the market in short to medium term but is expected to help mitigate the oversupply situation in most markets.

“After the recent bank rate cut by RBI in July 2017, we do not expect any further rate cut in second half (H2) 2017. Also, the prices have been stabilised in most markets, and any further reduction is unlikely,” said Surabhi Arora, Senior Associate Director, Research, Colliers International India.

“Thus, buyers should expedite their buying decisions and take advantage of lower interest rate regime. The first-time homebuyers can also get benefit from the incentives under Pradhan Mantri Awas Yojna (PMAY),” she added.

Bengaluru with about 13,400 of new unit launches in the first-half (H1) of this calendar year (Jan-June 2017) ranks second in total residential launches in the country, next to Mumbai with 14,000 units.

Though the residential market in Bengaluru faced a notable drop of 23 per cent compared to H1 2016. Localities such as Yelahanka, Devanahalli, Ranchenahalli and Kogilu recorded the highest number of launches in the city.

“Most of the new launches were in the mid-segment category catering to the higher demand from IT employees of the city,” said Arora.

Against the backdrop of the demonetisation drive and the announcement of RERA implementation, market sentiment was suppressed and impacted the new project launches significantly during H2 2016 in Mumbai.

H1 2017 was marked by the finalisation of the RERA’s norms and the website launch for registration of projects. Although developers were expecting it, the transition towards a RERA-compliant regime has been difficult for many.

“In H1 2017, we noticed a slight improvement in supply to 14,000 new launches (including 3,800 pre-launches) in the Mumbai Metropolitan Region (MMR) and its suburbs representing a 16 per cent increase over H2 2016,” said Arora.

“About 58 per cent of the new launches were in the mid-end segment, whereas luxury and high end properties represented only 17 per cent and 25 per cent share in the total new launches,” she added.

Chennai’s residential market witnessed the launch of nearly 5,300 residential units, representing a rise of 19 per cent from H2 2016. Of the total launches, 33 per cent were concentrated in peripheral locations of the city’s south quadrant along Old Mahabalipuram Road (OMR), Grand Southern Trunk (GST) and East Coast Road (ECR).

According to Arora, “After the instability in the market at the beginning of 2017, the residential sector is now recuperating.” She further added that reputed developers in the mid-market category accounted for about 70 per cent of the total launches in the city.