The first quarter of calendar year 2015 has seen the lowest number of real estate project launches over a two-year period, a recent report released by real estate consultancy Cushman & Wakefield (C&W) has said.

With a total 24,700 units residential units launched, the decline was over 50 per cent compared to that in the same period of last year. The drop in launches comes on the back of less-than-expected sales in the residential sector, due to which developers are holding back on new launches and instead focusing on completing their existing projects, the report said.

Also, with a few key cities planning to roll out new development plans (DP), developers are withholding new projects till the new regulations come into effect, it added.

Shveta Jain, Executive Director, Transaction Services, Residential, C&W said, “Input costs, including those towards statutory approvals from the State Government, cost of land, and land development have been rising. In addition, while the market sentiment is positive and enquiries have increased, the conversion of interest to sale is low."

Among new unit launches during the first quarter, only the high-end segment registered a y-o-y growth of 26 per cent. While all other segments have seen a considerable decline, affordable housing segment units reduced significantly by over 80 per cent. Developers are inclined to the high-end segment where profit margins are typically higher, as builders look to offset increasing land and development costs.

According to the report, Hyderabad saw a massive surge in high-end segment launches that rose to 3,300 units, of which about 98 per cent were in the north-west quadrant of the city, mainly Madhapur and Gachibowli, where corporates are increasingly looking to set up offices.

As corporates move in, residential developers expect the senior management of firms to shift there, driving the demand for high-end residences over the next few years.

Bengaluru witnessed a y-o-y decline of 76 per cent in unit launches with nearly 4,100 units launched during the first quarter of 2015. Due to a cautious investment attitude, the absorption rate here has declined, leading to a lot of unsold inventory and, thereby, restrained supply. However, almost 41 per cent of the total units were launched in the south-east submarket, primarily along Sarjapur Road and Hosur Road, and an additional 25 per cent in the North submarket, in Yelahanka and around Kogilu.

There has also been a reduction in the average number of units per project, which has declined from 287 units in Q1 2014 to 233 units per project. The average number of units per project was highest (669) in Hyderabad, followed by 567 in Mumbai. In Delhi-NCR, Kolkata and Pune, comparatively smaller projects with fewer number of units were launched in Q1 2015.

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