NCR’s residential realty prices at 3-year low: Report
Residential real estate prices in the National Capital Region (NCR) have plummeted four per cent year-on-year (y-o-y) to 2013 levels in the first half of calendar year 2016 (H12016), says a India Real Estate-Residential and Office report by Knight Frank for January -June 2016 period. Price growth across all cities, however, remained muted in H12016, the report says.
On a sequential basis, the fall in the residential segmentprices in the NCR has been sharper. Prices, according to the global real estate consultancy, hit Rs 4,346 per square feet (sq ft) in H12016, compared to Rs 4,578 in the year-ago period, translating to a fall of around 5.1 per cent.
NCR, according to the report, also witnessed the sharpest drop in new launches at 41per cent y-o-y, to 17,462 units (nine per cent overall drop in new launches from 117,200 units in H12015 to 107,120 units in the last six months), followed by Chennai and Pune at 36 per cent and 32 per cent, respectively.
“NCR, which has been in a time correction phase since the past three years, also witnessed a four per cent drop in quoted prices. Cash-strapped developers are concentrating on completing their existing projects to boost cash flows, since most of the projects have a construction-linked payment plan. This has pushed the developers to bring down prices and restrict new launches in H12016,” the report says.
Given the backdrop, Knight Frank does not foresee a quick recovery in residential real estate prices in the NCR region. It expects prices in the residential segment to remain stagnant at the current level in the remaining half of the calendar year.
“A silver lining in this gloomy market has been provided by Greater Noida and Gurgaon (now Gurugram) that saw over 80 per cent of the launched units,” said Rajeev Bairathi, executive director and head-capital markets, Knight Frank.
In terms of sales, top six cities (Mumbai, NCR, Bengaluru, Pune, Chennai and Hyderabad) witnessed a positive growth of seven per cent in H12016 vis-a-vis sales, with the number of units sold rising to 135,015 in H12016. However, this is still considerably lower than 185,800 units that were sold across these cities in H12015.
“Mumbai and Bengaluru led the positive growth in sales volume, at 23 per cent and 18 per cent y-o-y, respectively, in H12016. However, NCR, Chennai and Kolkata are still reeling under pressure, in terms of sales volume, and have reported a negative growth in H12016,” the report says.
With a drop in new launches and a pick-up in sales volume, the inventory pressure on developers also eased significantly in the last six months, the Knight Frank report says, with the number of unsold units available in the residential market reducing from 710,340 units in H12015 to less than 660,240 units in the H12016 period, translating into a drop of seven per cent.
“The real estate sector in India could be at its inflection point, with sales in the top six residential markets showing a positive trend. The H12016 research shows that the unsold inventory levels have dropped by seven per cent y-o-y, thus, bringing in some cheer to developers. Although Mumbai, Bengaluru and Ahmedabad have shown positive growth, NCR, with its dismal performance, still remains a concern,” said Shishir Baijal, chairman and managing director, Knight Frank India.