Fear of being penalised under Real Estate Regulatory Authority (RERA) has led to developers limiting the launch of new projects and concentrating more on completion of existing projects. Property sales in the top six residential markets across the country showed a positive trend, registering 7% growth in the first half of 2016 with the growth story being scripted by Mumbai and Bengaluru, says the India Real Estate report by Knight Frank India. NCR did not perform well, but Gurgaon and Greater Noida saved the day.
New launches in NCR dropped by a staggering 41% year-on-year in the first half of 2016. Greater Noida and Gurgaon did well, launching over 80% of the total units launched in NCR. Almost 60% launches in NCR were in the less than Rs 50 lakh category. Gurgaon and Greater Noida accounted for almost 75% sales across NCR, the report says.
The current unsold inventory levels stand at 6.60 lakh units compared to 7.10 lakh units in the first half of 2015, a drop of almost 7% on a year-on-year basis. The number of units sold jumped from 126,615 in the first half of 2015 to 135,015 in the first half of 2016. Mumbai and Bengaluru led the positive growth in sales volume at 23% year-on-year and 18% year-on-year, respectively.
“The real estate sector in India could be at its inflection point with sales in the top six residential markets showing a positive trend, registering 7% growth in the first half of 2016. Factors like lower interest rates and a good monsoon will further boost the stakeholder sentiment. We had predicted a revival in market momentum in our FICCI – Knight Frank Sentiment Index of the first quarter and the sentiments have gone up after six consecutive quarters. The reasons for these can be attributed to the timely correction of prices in most markets, RERA becoming a reality, recent amendments to REITs and an overall positive regulatory environment to name a few,” says Shishir Baijal, chairman and managing director, Knight Frank India.
The weighted average price growth in the premium segment registered a 5% dip in the first half of 2016, compared to the same period in 2015. The growing preference among homebuyers for ready-to- move-in projects or projects with a certainty of possession within a year was another trend, says the report
The NCR’s residential sector’s performance has been dismal. Piled-up inventories and slow sales velocity have brought stagnancy in the market resulting in developers being unable to increase prices substantially. The market, already in a time correction phase for the last three years, has for a first time shown a decline in the quoted prices.
“The market also saw a growing preference among homebuyers for ready-to-move-in projects or projects with certainty of possession within a year. This further instilled the fear of Real Estate Regulatory Authority (RERA) and the provision of re-registration which led to developers controlling the launch of new projects and concentrating more on project completions. The silver lining in this gloomy market has been provided by Greater Noida and Gurgaon who saw over 80% of the total launched units,” says Rajeev Bairathi, executive director and head - Capital Markets, Knight Frank India.