Metros lead the drop, but drag also seen in smaller places, with high prices, interest rates & job gloom.
Sale of residential properties has dropped by 18-28 per cent in major metros, hit by dampened demand as a combination of higher property prices, rising home loan rates, and job cuts take a toll.
Data released by real estate research firm Liases Foras for Delhi, Mumbai and Bangalore indicates this trend. Bangalore, for instance, considered one of India’s fastest growing and most crowded metros, shows a 21 per cent drop in residential area sold in April-September, compared to last year.
“Residential sales across cities are falling. After a record jump in Delhi and Mumbai prices, tier-II cities also got a fillip, but six to 12 months later, in cities like Pune and Chennai, too, sales are now on a downward slide with the price increase,” said Sanjay Dutt, chief executive of the business division of international property consultants Jones Lang LaSalle India. “Inflation and interest rates are largely responsible for denting sales. In the present environment, high priced apartments are not selling; only projects in the mid-income segment are selling”.
Tier-II also hit
A number of realtors launched projects in the high-end segment after the realty market upturn in March 2009, as margins here are higher at 45-60 per cent compared to 20-35 per cent in the mid-income segment.
Ahmedabad, Hyderabad, Chennai, Goa, Mohali and other cities — called Tier-2 by marketers — saw an influx of bigger listed developers launching projects at that time. They have either slowed the pace of their launches or exited those locations due to a slowing in sales.
"All across the country, the residential sales numbers for the past two-three months have come down,” said Gulam Zia, national director, research and advisory services, at Knight Frank India, another property consultancy. “Volume dips in most cities like Ahmedabad, Chennai, Pune and Hyderabad has been in the range of 15-20 per cent, whereas Delhi has seen a fall of 20-25 per cent and Mumbai sales have plummeted by 60-70 per cent."
But, not down for all
Not all developers second these findings. Venkat R Narayana, chief financial officer of the Prestige Group, a Bangalore-based listed real estate company, said, “The Bangalore market in general has seen very good sales momentum and products in the affordable and mid-income category in the range of Rs 2,800-4,000 per sq ft are doing well. In the first six months, we have recorded new sales worth Rs 1,000 crore and in the next two quarters, we will be launching two-three new projects in the residential segment, of which one will be in Chennai.”
In Delhi, sales dropped by 18.7 per cent in April-September this year, according to the Liases Foras data. Home sales in Mumbai slowed the most, falling almost a third. Forecasts on home sales are also not good.
“Price corrections have begun in the Mumbai market, though it has not happened as much as people were expecting. In other metro cities also, prices had skyrocketed. The global economic outlook is weak, with retrenchments in the financial sector and possible job cuts in others. We expect a downward curve in sales to continue, unless interest rates and prices come down,” said Pankaj Kapoor, founder and chairman of Liases Foras.
Realtors are pinning their hopes on the mid-level segment. “In Noida, the court has given directions and after that, we have launched a mixed-use development project last week. We are hopeful that sales will continue in the mid-income segment,” said R K Arora, chairman and managing director, Supertech, one of the largest land holders in Noida.
Source: http://www.business-standard.com/india/news/home-sales-drop-across-cities/458239/
