[ecis2016.org] The implementation of RERA and the GST, had a significant impact on the residential real estate market in India, with new launches falling by 17% in the first half of the year, as compared to H2 2016, says a report by Colliers International
Although the market had returned to normal after the demonetisation drive in November 2016, it was further impacted by the implementation of the Real Estate (Regulation and Development) Act (RERA) and the nationwide execution of the Goods and Services Tax (GST) and compliance with the two new regulations is likely remain a challenge for several developers for at least the next six months, according to a report by Colliers International. Consequently, H2 2017 could continue to witness a decline in the number of launches, says the report, titled ‘India Residential Property Market Overview H1 2017’. However, sales are likely to pick up during the festive season, due to higher optimism among buyers after RERA. This will further address the issue of unsold inventory in the market. As per Colliers, buyers who are looking to invest in the next three to four months should opt for RERA-registered and ready-for-possession projects.
You are reading: New launches decline by 17% in H1 2017: Colliers report
The residential market witnessed a 17 per cent decline in the number of new launches since H2 2016, with 40,600 new units introduced in the first half of 2017 in prime cities. Mumbai and Bengaluru were at the forefront, with 35 per cent and 33 per cent of total launches, respectively, while Chennai, Pune and the NCR accounted for the remaining 13 per cent, 10 per cent and 9 per cent share, respectively. The luxury market has been affected the most and the number of launches reduced considerably in this segment. Colliers forecasts similar sentiments to prevail in the next six months, with affordable housing grasping a major share of new launches.
“The supply of new projects will remain restricted in the market, in short to medium term but this will help to mitigate the oversupply situation in most markets. After the recent rate cut by the RBI, we do not expect any further rate cut in H2 2017. Also, prices have stabilised in most markets and any further reduction is unlikely. Thus, buyers should expedite their buying decisions and take advantage of the low interest rate regime. First-time home buyers can also get the benefits from the incentives under the Pradhan Mantri Awas Yojna (PMAY),” said Surabhi Arora, senior associate director, research, Colliers International India.
Mumbai housing market
Against the backdrop of the demonetisation drive and the announcement of RERA, market sentiment was suppressed and impacted new project launches significantly during H2 2016. For Mumbai, H1 2017 was marked by the finalisation of the RERA’s norms and the launch of the website for the registration of projects. Although developers were expecting it, the transition towards a RERA-compliant regime has been difficult for many. In H1 2017, we noticed a slight improvement in supply to 14,000 new launches (including 3,800 pre-launches) in the Mumbai Metropolitan Region (MMR) and its suburbs, representing a 16 per cent increase over H2 2016. About 58 per cent of the new launches were in the mid-end segment, whereas, luxury and high-end properties represented only 17 per cent and 25 per cent share, respectively, of new launches.
Capital values
| Micromarket | Capital values (Rs/sq ft) | Half-yearly change | Annual change |
| South Mumbai | 45,000 – 65,000 | -3% | -6% |
| Worli | 44,000 – 52,000 | -6% | -9% |
| Prabhadevi | 46,000 – 51,000 | -3% | -4% |
| Bandra | 29,000 – 51,000 | -1% | -2% |
| Khar | 25,000 – 33000 | -3% | -6% |
| Santacruz | 24,000 – 28,000 | -2% | -4% |
| Juhu | 27,500 – 30,500 | 0% | -1% |
| Andheri | 18,000 – 20,500 | -4% | -7% |
| Powai | 19,500 – 26,500 | -3% | -4% |
| Thane | 7,000 – 12,200 | 1% | -4% |
| Navi Mumbai – Prime Areas | 9,000 – 19,000 | -3% | -3% |
| Navi Mumbai – Emerging Areas | 7,000 – 10,000 | 3% | 13% |
Source: Colliers International India Research
Note: Above values represent indicative base selling price for premium properties for secondary market products.
Bengaluru housing market
Strong office sector performance, indicates a healthy demand scenario for the residential sector in medium to long term. Colliers forecasts the mid-range segment would continue to drive sales, as the festive season approaches in September and October and developers offer various promotions and attractive payment plans, amidst a soft home loan interest rates environment.
With about 13,400 new unit launches in H1 2017, the city ranks second in total residential launches in India, next to Mumbai, although the residential market in Bengaluru faced a notable drop of 23 per cent compared to H1 2016. Localities such as Yelahanka, Devanahalli, Ranchenahalli and Kogilu, recorded the highest number of launches in the city. Most of the new launches were in the mid-segment category, catering to the higher demand from information technology employees of the city. Private equity investment was sustained, with notable investments by KKR India Asset Finance Management, Edelweiss Group and the HDFC Realty Fund.
Capital values
| Micromarket | Capital values (Rs/sq ft) | Half-yearly change | Annual change |
| Central | 19,000 – 29,000 | -4% | -4% |
| Cooke Town | 8,000 – 14,000 | 0% | 2% |
| Jayanagar | 8,500 – 12,000 | 4% | 8% |
| Sadashivanagar | 9,000 – 15,000 | 1% | 0% |
| Airport Road | 8,500 – 10,500 | -3% | -3% |
| Indiranagar | 8,500 – 12,500 | 2% | 2% |
| Bannerghatta Road | 4,500 – 8,700 | 1% | 0% |
| Kormangala | 6,800 – 10500 | 1% | -1% |
| Whitefield | 4,500 – 7,800 | -6% | -6% |
| Yelahanka | 4,500 – 9,000 | -3% | -4% |
Source: Colliers International India Research
Note: Above values represent indicative base selling price for premium properties for secondary market products.
Chennai housing market
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After the instability in the market at the beginning of 2017, the residential sector is now recuperating. With the notification of Tamil Nadu RERA, Colliers would advise developers to obtain all necessary approvals on time, pay attention to project planning, use modern construction technologies to speed up the development process and manage project funds efficiently to avoid delays and align for a smoother transition towards RERA compliance.
Chennai’s residential market witnessed the launch of nearly 5,300 residential units, representing a rise of 19 per cent from H2 2016. Of the total launches, 33 per cent were concentrated in peripheral locations of the city’s south quadrant along Old Mahabalipuram Road (OMR), Grand Southern Trunk (GST) and East Coast Road (ECR). Reputed developers in the mid-market category accounted for about 70 per cent of the total launches.
Capital values
| Micromarket | Capital values (Rs/sq ft) | Half-yearly change | Annual change |
| Boat Club | 25,000 – 35,000 | 1% | 0% |
| Nungambakkam | 19,000 – 26,000 | 0% | 0% |
| Anna Nagar | 13,000 – 18,000 | -4% | -2% |
| Adyar | 13,500 – 18,500 | 7% | 7% |
| Besant Nagar | 13,500 – 17,300 | 0% | -1% |
| T. Nagar | 13,500 – 19,500 | -3% | -3% |
| Alwarpet/RA
Puram |
18,000 – 26,000 | 1% | -1% |
| Velachery | 7,000 – 10,000 | 0% | 0% |
| Sholinganallur | 4,600 – 6100 | 0% | 0% |
| Siruseri | 3,990 – 5,500 | 0% | 0% |
Source: Colliers International India Research
Note: Above values represent indicative selling price for premium properties in secondary market.
Pune housing market
In H1 2017, the Pune market witnessed about 4,034 new residential unit launches, mostly in the mid-range segment. Although the government has granted infrastructure status and incentives to affordable housing, we have not observed much expansion in this sector from Pune developers. Developers are still exploring the feasibility of such projects in Pune. The average capital value of mid-range segment projects is already in an affordable range of Rs 4,000-5,000 per sq ft.
Capital values
| Micromarket | Capital values (Rs/sq ft) | Half-yearly change | Annual change |
| East | 4,120 – 7,350 | -2% | -7% |
| Old Central | 9,300 – 14,700 | -2% | -4% |
| Central | 6,860 – 13,720 | -8% | -18% |
| South East | 4,660 – 7,760 | -3% | -1% |
| West | 4,850 – 9,220 | -3% | -2% |
| South West | 6,790 – 11,640 | -3% | 1% |
| South | 4,268 – 6,060 | -3% | -3% |
| North | 4,560 – 5,630 | -3% | -3% |
Source: Colliers International India Research
Note: Above values represent indicative base selling price for premium properties for secondary market products.
Central – Koregaon Park/ Kalyani Nagar/ Boat Club/ Sopan Baug
Old Central – Camp/ Deccan
East – Viman Nagar/ Kharadi/ Wagholi
South – NIBM/ Undri/ Kondhwa
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South East – Magarpatta/ Hadapsar/ Keshav Nagar
West – Baner/ Balewadi/ Hinjewadi/ Wakad/ Pashan/ Aundh
South West – Kothrud/ Bavdhan/ Warje
North – Pimri/ Chinchwad/ Chakan/ Talegaon
Gurgaon housing market
In line with an earlier forecast by Colliers, new launches in Gurgaon fell to an all-time low of only 3,000 new units in H1 2017. About 90 per cent of the total unit launches were in the affordable category, under the government’s Pradhan Mantri Awas Yojna. A majority of the units launched in H1 2017, were in the price band of Rs 20-25 lakhs that caters to the affordable segment in Gurgaon.
As per Colliers, registration under RERA should start in Q3 2017 and it is likely to take at least six months, for developers to become accustomed to the new regulation. Thus, Colliers expects new launches to remain subdued in H2 2017 but sales are expected to revive during the festive season, primarily in ready-to-move-in projects, as most developers would provide discounts and attractive payment plan options.
Capital values
| Micromarket | Capital values (Rs/sq ft) | Half-yearly change | Annual change |
| Golf Course Road | 11,000 – 35,000 | -2% | -2% |
| Sohna Road & Extension | 6,000 – 14,000 | 0% | 2% |
| DLF Phase I | 11,000 – 13,000 | 0% | 0% |
| Sushant Lok | 14,000 – 17,000 | -3% | -1% |
| NH-8 | 10,500 – 18,000 | 0% | 1% |
Source: Colliers International India Research
Note: Above values represent indicative base selling price for premium properties for secondary market products.
Noida housing market
The completion of projects and the end-user interest in the ready-to-move-in projects, kept the market alive in H1 2017. Most of this demand was concentrated in newly developing sectors, such as 72 to 78, sector 100, 107, 137 and Greater Noida west. Developers refrained from launching new projects in H1 2017 and focused on completion of existing projects. About 3,000 units got completion certificates in the last six months, while new launches hit bottom at under 1,000.
Capital values
| Micromarket | Capital values (Rs/sq ft) | Half-yearly change | Annual change |
| Sector 44 | 7,000 – 11,000 | 0% | -3% |
| Sector 50 | 6,500 – 7,500 | 0% | -3% |
| Sector 61,62 | 4,500 – 5,500 | 0% | -15% |
| Sector 92/93 | 6,500 – 9,500 | 0% | – 5% |
| Sector 28, 29, 37 | 7,500 – 9,500 | 0% | – 4% |
| Sector 100 to 110 | 5,000 – 5,600 | 0% | – 5% |
| Sector 70 to 79 | 4,300 – 5,000 | 0% | -5% |
Source: Colliers International India Research
Note: Above values represent indicative base selling price for premium properties for secondary market products.
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