International property consultants Cushman & Wakefield's and Global Real Estate Institute's (a group of global real estate investors) annual report “Embracing Change – Scripting the future of Indian Real Estate” estimates a 1.3 million-unit shortfall in residential units during the next five years.

The report estimates a total demand of 2.3 million units of residential property in the next five years, while the supply is expected to be approximately 1 million units in the seven cities — NCR, Mumbai, Bangalore, Chennai, Hyderabad, Pune and Kolkata — between 2011 and 2015. According to the report, the total demand is approximately 3.94 million housing units, growing at 11 per cent Compounded Annual Growth Rate, with 2.3 million units demand in the top seven cities.

NCR is expected to record the highest demand of more than 700,000 units, while Mumbai is likely to record the highest CAGR of 14 per cent in the next five years. In Bangalore, the demand is pegged at 287,000 units in this period.

The anticipated demand is likely to exert an upward pressure on property prices, especially in markets such as NCR, Mumbai and Bangalore, where the demand supply gap is high. On the other hand, Tier II cities such as Pune and Hyderabad are likely to see appreciation of capital values at a slower pace, compared to Tier I cities, during this time period.

Change unlikely in price-volume scene

A market report of a property exhibition hosted by the Maharashtra Chamber of Housing Industry (MCHI), from October 6- 9 indicates that affordability remains the key issue, with prices up by approximately 10 per cent during the last six months, says Edelweiss, a financial services company.

Despite the participation of 50 developers, transaction volumes are likely to remain tepid, as developers continue to hold prices in the face of significant deterioration in volumes. But there are no immediate triggers to enable price correction, while softening interest rates are likely to provide marginal support. Hence, there is unlikely to be any material change in the price-volume scenario, in the second half of 2011-12.

The property expo witnessed marginally higher participation, compared with the April 2011 expo, from developers and visitors. The key reason for this was that the festival season usually sees an uptick in activity, coupled with buyers' expectations that developers will offer discounts in ongoing projects. However, a fresh price hike since April 2011 continues to dampen buyers' sentiments, with minimal discounts on offer. Additionally, most projects within Mumbai city and the suburbs, on offer at the expo, had a ticket size of more than Rs 1 crore, which was beyond the affordability of a majority of buyers. Another emerging key pattern is prices in the Eastern suburbs of Vikhroli and Mulund being on par with prices in the Western suburbs of Goregaon, Malad and Kandivali.

Although a number of upcoming projects were on display at the expo, very few of them were being actively marketed by developers, citing delay in approvals. The pattern seen in the April 2011 expo continued, with developers demanding a premium of approximately 15-20 per cent for projects ready for delivery, and those to be completed within a year. Delivery dates of projects launched in April 2011 have seen fresh delays of 6-18 months, pointing to a slow pace of approvals in Mumbai city and suburbs.

AR Group launches Amara Ananta

The Chennai-based AR Group has launched Amara Ananta, a 4.2-acre residential project on East Coast Road (ECR), to the south of Chennai. More than 25 luxury villas on a nearly 6,000-square-foot plot, within a gated community, are on offer at approximately Rs 6 crore each, at Palavakkam, a coastal suburb. This is the second high-end residential project by the group, which has interest in IT infrastructure.

The AR Group is delivering its first residential development, the Amara Samudra, which consists of eight luxury villas of approximately 8,500 square feet, each costing approximately Rs 10 crore. This project, being delivered well ahead of schedule, is also located in Palavakkam on ECR. Announcing the launch of the high-end projects, Mr Amarnath Reddy, Managing Director, AR Group, said while continuing its focus on high-end residential projects, it has finalised plans for a beach resort. These are to be launched in the next few months, with a sky villa project of 22 apartments, on a 17-floor tower at Perungudi, on Old Mahabalipuram Road. Each apartment of approximately 4,000 square feet, a duplex unit, will again be a luxury offering. Also in the pipeline is a 10-acre beach resort on ECR, approximately 20 km south of Chennai.

Related Topics
comment COMMENT NOW