Cautious sentiments in the residential market marked the first quarter of 2016, as the top six cities witnessed an infusion of ~ 19,000 new residential units, wherein the maximum launches were concentrated in Mumbai (34%), Bengaluru (32%) and Pune (12%). While developers across all major cities steered clear of inundating the primary residential segment with too many new products, recovering market confidence prompted them to lure buyers with cash discounts and freebies.
“The falling interest rates and introduction of Real Estate (Regulation and Development) Act, 2016 has helped to recuperate the sentiments. What we need to resurrect in the residential market now is an affordable product with basic amenities at right price point. We are witnessing steady enquiries mainly in the affordable and mid-segment which is a good sign. However, demand is primarily from end-users and it will take some time to bring back fence sitters investors into the market again. Thus in the short term we are expecting capital values to remain stable”, says Surabhi Arora, Senior Associate Director Research at Colliers International India.
Bengaluru continued to remain in the bright spot as the city witnessed the launch of nearly 6000 new residential units in Q1, 2016, which represents a quarterly increase of 26% over the previous quarter. This happened despite developers concentrating their efforts on completing under construction projects in an oversupplied market. Almost all units launched in this quarter catered to the mid segment category signaling developers’ focus on introducing products keeping in mind end-users’ affordability and preferences. Similarly, this quarter did not witness the launch of villa projects and the entire new launches were in high-rise apartment complexes format.
The Chennai residential market grappled with low residential demand during the first quarter of 2016, as new launches remain muted. The residential property market witnessed a 9% dip in new launches over the previous quarter, as nearly 1,100 new units were launched during this period, out of which 10% were in soft launch stage. This dip is attributed to both low recovery in property markets in the aftermath of floods from a few months back, as well as delay in approvals owing to model code of conduct in the wake of upcoming state elections. Of the total units launched, 84% was dominated by the mid segment, while the rest concentrated between high-end and luxury segments. Perumbakkam, a prominent suburb in the southern part of the city witnessed the launch of nearly 68% units, followed by Santhome with a 16% share.
The Mumbai residential market witnessed improved sentiments in the first quarter, with a launch of about 6500 new residential units. There was an increased traction in the primary residential sales market, especially in the projects where developers were offering flexi payment plans and competitive pricing. Interestingly, a number of projects were launched in Central and Western suburb locations such as Chembur, Byculla, BKC, Goregaon, Maladin Q1 2016. Most of these projects were launched in the price range of INR 15,000 per sqft to 25,000 per sq ft. Besides this, a few mid segment projects in the price range of INR 7,500 to 8,000 per sq ft were also launched in Thane.
Pune’s residential property market witnessed the launch of more than 2,200 new units during this quarter as high inventory in residential segment curtailed new launches. All the new units launched catered primarily to the mid segment and were concentrated in eastern and western quadrants of the city due to consistent demand from IT-ITeS workforce and the city’s manufacturing sector base. Developers such as Godrej Properties, Purvankara Projects Ltd. and Kotle Patil Developers were amongst those who introduced new products in the market. Prominent completions included projects from builders such as Mittal Brothers, Nyati Developers and Mantra Properties. All the new project completions were attributed to the mid segment and augmented supply in locations such as Balewadi, Tathawade, NIBM and Wagholi.
It remained a dull year for the NCR market, as new residential launches took a step back. Gurgaon’s residential market continued to maintain status quo in terms of demand, as new launches dipped and capital values remained stagnant. The tepid response to the soft launch projects resulted in minimal new project launch in the market in Q1, 2016. The new project that came or sale in the market includes high end project ‘La Vida’ by Tata Housing at a basic selling price of INR 8,500 per sq ft and mid segment projects like Bestech Park View Altura by the Bestech Park View Altura Company and the Turning Point by Vatika at base selling price of 5,130 per sq ft. On the other hand, though NOIDA witnessed a number of completions in the first quarter, but the new launches continued to shrink. NOIDA’s residential market remained stagnant as the focus of the developers remained on completion of under-construction projects.