New residential launches have dropped 9 per cent to 1,07,120 in the first half of this year (January-June) compared to 1,17,200 in the same period last year, a report by Knight Frank India said on Monday.
This has impacted current unsold inventory levels which have dropped 7 per cent to 6.60 lakh units in the first half of this year from 7.10 lakh units in the corresponding period in 2015.
“The National Capital Region (NCR) has witnessed the sharpest drop in new residential launches at 41 per cent year-on-year, followed by Chennai and Pune at 36 per cent and 32 per cent, respectively,” the report stated. The ‘India Real Estate Report’ by the firm tracked residential and office space trends across key markets in the January-June period.
Interestingly, green shoots of turnaround were seen in the Mumbai Metropolitan Region which saw new residential launches register 29 per cent year-on-year growth.
“The sector could be at an inflection point with sales in the top six residential markets witnessing 7 per cent growth in the first half of 2016. On the office front, the January-June period has witnessed 12 per cent growth in transaction volume across the top six cities,” Shishir Baijal, Chairman and Managing Director, Knight Frank India, said.
The first half of the year has seen 19 million sq ft of office space being delivered, compared to 15.8 million sq ft in the same period last year.
Vacancy levels in office space in the top six cities fell marginally from 17 per cent in first half of 2015 to less than 15 per cent in the same period in 2016, the report said.
Prices in the NCR residential market registered a 4 per cent drop in the first half of 2016. The office market in NCR saw vacancy levels hover around 20.6 per cent, and new completions were at an all-time low, the report added.
Interestingly, while the IT/ITeS sector used to be the major occupier of office space in NCR, the manufacturing sector has seen a two-fold jump in transacted space in the first half of 2016 against the same period last year.
Rajeev Bairathi, Executive Director and Head, Capital Markets, Knight Frank India, said, “Piled-up inventory and slow sales velocity has brought stagnancy in the NCR market resulting in developers being unable to increase prices substantially. The market was already in a time correction phase for the last three years and this is the first time that there has been a decline in the quoted prices in NCR.”
Price wise, growth across all the cities remained flat in the last one year. The only exception was the NCR market where prices corrected for the first time registering a 4 per cent dip y-o-y in H1 16. The prices are expected to see almost no change across cities in the second half of 2016 as well.
As per the report, in H1 16, the average residential price per sq ft in Mumbai stood at Rs 8,093, while it was Rs 4,346 (NCR), Rs 4,805 (Bengaluru), Rs 4,860 (Pune), Rs 4,662 (Chennai), Rs 3,620 (Hyderabad), Rs 3,570 (Kolkata) and Rs 2,810 (Ahmedabad).
Bengaluru and Pune continue to remain the best performing residential markets in the country with minimal quarter to sell (QTS) unsold inventory. With the highest unsold inventory and QTS, NCR emerges as the worst performing market.
The new launches in the first half of this year is the lowest number of launches since H1 2013 when 232,490 units were launched collectively in Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, NCR and Pune.