Depreciation in sales, But the property prices are still alike

Bangalore: Real estate developers are very much loud about declining residential sales, however; buyers and individuals who are hunting for a house for many years say that there is nothing on hand at affordable prices. In fact; Sky rocketing prices and interest rates are pulling back many home buyers.

One of the leading real estate players, DLF has reported a drop in sales at the end of the December quarter as 350,000 sq ft and the housing property sale in Gurgaon which is supposed to be DLF’s main business had dropped down 55 percent in sales from 24355 units in 2013 to 10887 units in 2014. In the Prop tiger latest report from Noida reported that; roughly 43 percent had dropped in 2014 at 45,132 as compared to 78,872 units sold in 2013. The total unsold inventory in cities like Mumbai, Navi Mumbai and Thane is on the rise, it stood at 127,191 units at the end of December quarter and in Gurgaon, Bhiwadi and Sohna the figure is 45,087 units.

However, industry sources said the property prices are unlikely to cool in the near future – a cause of worry for buyers. Barring Noida and two most premium real estate markets in India have seen a marginal increase of 2 percent in Gurgaon and 5 percent in Mumbai. The average rate for an apartment in Mumbai and Gurgaon is increased to Rs 11,783 per sq ft and Rs 7,737 per sq ft at the end of 2014 from Rs 11,226 and Rs 7613 at the beginning of the year. Experts say high prices continue to be a road block in these two markets.

Anshuman Magazine, Chairman and managing Director of CBRE South Asia, says; “In the seven leading cities of India, the residential sales are decline by nearly 30 percent year on year by the end of 2014 largely due to high price points. The drop, which was noted across all major cities, was especially steep in the Delhi NCR. All major markets witnessed a slowdown in sales. Mumbai city noted a 7 percent rise over H1 2014 but a 2 percent decline on an annual basis.”

Demand from both investors and end users remained high across India. Noida saw a perfect demand from both end-users and investors; Mumbai saw a 77 percent demand from end users and 23 from investors and Gurgaon 62 percent demand from end users and in Hyderabad the entire demand is from end users.

Depreciation in sales forced developers to slow down the launches as the developers and experts saw that the real growth is coming from the mid level housing segment. The new supplies launched in 2014 were mostly from affordable segment ranging Rs 25 lakh to 50 lakh. Over 259,660 units launched in 2014 in that 150,000 were ranging below Rs 25 Lakh.

Many reputed developers such as Sobha Developers, Mahindra Life spaces and Shapoorji Pallonji have opened independent verticals for affordable housing. Due to the new government initiative to provide housing for all is a great opportunity for the developers to strike the market potential of offering affordable homes to the middle income group buyers. This year buyer’s sentiment is on the rise and the recent RBI move to cut the interest rates will encourage buyers to make investment decision faster. In the next two quarters, we can see the rise in demand, says Brotin Banerjee, MD and CEO, Tata Housing Development Company Ltd.