Q3 Report On India's Residential Property Market Overview

Pan-India Highlights

Bangalore: Overall markets showed stagnant construction activity and lesser new residential project launches during the third quarter of 2013 as compared previous year same quarter. Pressures of increasing unsold inventory and a liquidity crunch resulted in fewer project launches.  Due to liquidity issues, delay in construction activity and slow absorption rates, project completions registered a rather weak trend this quarter following the previous one, barring a few minor completions noted in Kolkata and Gurgaon, reveals a survey done by Colliers International.

Due to stagnancy in demand, the capital values in most of cities remained stable except in few precincts capital prices continued to push upwards marking 1-3 percent increase in Western Mumbai, 2-9 percent in Chennai and 3-10 percent increase in Bengaluru due to increased demand and improved infrastructure. In NCR, there is a downward pressure on capital values as the asking price for prime residential properties has come down by approximately 5 – 10 percent. However, not many deals have been concluded in the market.

Mumbai, Gurgaon and Noida registered stable rental rates throughout the third quarter of 2013. Other cities experienced increase in rental rates such as Bengaluru with 6-7 percent, Kolkata with 4-9 percent and Chennai with 2-9 percent. Delhi on the other hand, registered a dip of rental rates between 5-14 percent mainly due to Embassies and MNCs maintaining their current costs. Going forward End Users and buyers will continue to be cautious due to the current uncertain economic and political conditions; coupled with high residential prices. Capital values across most micro-markets in almost all the major cities will remain stable, even though transaction volume will remain constraint. Importantly, the current oversupply in the market will get mitigated in the coming quarters, as very limited new projects are being launched.

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