Housing launches in Bengaluru, Mumbai and Delhi NCR see significant jump in 2018: Report

[ecis2016.org] The housing markets in the top three cities of Bengaluru, Mumbai and Delhi NCR, have witnessed a significant revival in 2018, with Delhi NCR leading the way, in terms of new launches and sales, says a report by JLL

After a prolonged lull of nearly three years, the residential markets in the top three cities of Bengaluru, Mumbai and Delhi NCR, showed definite signs of recovery in 2018. The positive impact of the regulatory reforms including the implementation of the Real Estate (Regulation and Development) Act (RERA) and the Goods and Services Tax (GST), is now evident, according to JLL’s Residential Market Update. The number of new launches more than doubled in Delhi NCR, while Bengaluru and Mumbai recorded 81 per cent and 22 per cent annual growth, respectively. Delhi NCR also led with 71 per cent year-on-year (y-o-y) growth in sales, the report added.

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Property launches on a high in NCR, Bengaluru and Mumbai

Source: JLL REIS

Notes: Mumbai includes Mumbai city, Mumbai suburbs, Thane city and Navi Mumbai. Delhi NCR includes Delhi, Faridabad, Ghaziabad, Noida-Greater Noida and Gurugram.

There has been a significant rise in number of launches across Delhi NCR, Mumbai, and Bengaluru in 2018, compared to 2017. According to JLL Research, Delhi NCR witnessed 114 per cent year-on-year growth in new launches at 17,660 units, which is the highest among the three markets. While Bengaluru recorded annual growth of 81 per cent at 37,286 units, Mumbai’s housing market saw a healthy 22 per cent rise in launches.

Strong sales momentum in NCR, Bengaluru and Mumbai

Source: JLL REIS

Notes: Mumbai includes Mumbai city, Mumbai suburbs, Thane city and Navi Mumbai. Delhi NCR includes Delhi, Faridabad, Ghaziabad, Noida-Greater Noida and Gurugram.

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While new launches across these three key metros recorded strong growth, positive consumer sentiment in the post-reforms regime has resulted in higher sales. In percentage terms, Delhi NCR topped with 71 per cent y-o-y growth in sales, at 24,725 units. However, the jump in sales was due to low base effect. While sales in the first half of 2018 continued to be slow in Bengaluru, it picked up significant momentum in the latter part of the year, expanding at 17 per cent on an annual basis. After a consistent drop in sales since 2016, the offtake of residential units in Mumbai revived and grew at 10 per cent during 2018.

Commenting on the data, Ramesh Nair, CEO and country head, JLL India said: “With the supply side likely to remain strong in 2019 and prices remaining stable across the country, the market will be favourable for home buyers in times to come. While there has been a spurt in residential launches in 2018, a possible rationalisation in GST rates for under-construction properties, is on the anvil. These positive developments, along with the implementation of RERA, is good news for home buyers. Developments in Delhi-NCR, Bengaluru and Mumbai reflect the popular sentiment in the market. A recovery in the housing segment in these cities, will bring back buyer’s faith in the residential market.”

[ecis2016.org] Residential sales grew by six per cent in 2018; launches rise by 76 per cent: Report

Property price trends and forecast in NCR, Bengaluru and Mumbai

The rise in launches has, however, added to the number of years that is needed to sell (YTS) the existing unsold inventory in the three cities. As a result of the higher quantum of unsold inventory and sluggish demand of the past few years, housing prices have remained steady across the three markets. The stability in the rates is likely to push the sales momentum in 2019.

Base year (2014) = 100; Source: JLL REIS

In absolute terms, residential prices over the last five years have increased marginally, at a CAGR of not more than 1.5 per cent, across the three cities. Average prices in Bengaluru, Mumbai and Delhi NCR currently stand at Rs 4,150 per sq ft, Rs 10,669 per sq ft and Rs 4,690 per sq ft, respectively.

City-wise highlights

Delhi-NCR market performance in 2018

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Launches: New launches more than doubled in Delhi NCR during 2018, led by heightened activity in Gurugram and Ghaziabad. However, launches continued to be significantly lower than the momentum of around 70,000 units seen in 2014 and 2015. While Noida constituted a majority share in total launches, its share reduced significantly to 39 per cent in 2018, from 65 per cent in 2017.

Sales: After a gap of four years, Delhi-NCR recorded robust sales growth of over 70 per cent in 2018, compared to the previous year. However, this is still lower than the sales volume of 2014 and 2015, when the region witnessed sales volume of more than 40,000 units. Gurugram, followed by Noida-Greater Noida and Ghaziabad, reigned the robust recovery in the offtake of housing units.

Bengaluru market performance in 2018

Launches: New launches posted an impressive growth, driven by heightened activity in the micro-markets of prime central (Vittal Mallya Road and Binnypet), secondary (Bellandur, Dollars Colony, Rajajinagar) and Kanakapura Road. Kanakapura Road has emerged as a promising residential hub, owing to the expected improvement in connectivity to the main city (Green Line of Namma Metro has commenced partially), ample availability of land parcels and favourable pricing, as compared to other established markets in the vicinity.

Sales: Adequate supply in all price brackets resulted in Hosur Road and Whitefield contributing to more than 50 per cent of the overall sales in 2018.

Mumbai market performance in 2018

Launches: Navi Mumbai and the western suburbs of Malad, Kandivali, Borivali and Dahisar, witnessed significant traction in terms of launches. The rapid ongoing infrastructure developments, such as the metro rail network, coastal road and extension of the suburban rail network (Nerul-Seawoods-Uran) across the city, have propelled the interest of developers.

Sales: While the micro-markets of Thane, the western suburbs of Andheri, Jogeshwari, Goregaon, Malad and Borivali and the eastern suburbs of Ghatkopar, Vikhroli, Kanjurmarg and Mulund, continue to contribute a proportion of the overall sales, south-central Mumbai (Parel, Byculla, Matunga and Wadala) exhibited an impressive 53 per cent growth in 2018, driven by a strong surge in sales during the January-June 2018 period. The area has been facing slackening sales and mounting inventory as demand tapered, owing to infrastructure bottlenecks.

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