In their latest report International Property Consultant, Cushman & Wakefield recorded that, there has been a 43% increase in Q1 2014 new residential unit launches from the previous quarter. The total estimated unit launches were recorded at 55,500 units across major eight cities of India with Bengaluru recording the largest number of units launched, an increase of 22% from previous quarter. NCR on the other hand saw the sharpest decline in launches of new residential units with a drop of 18% over previous quarter. Barring NCR and Ahmedabad, all other cities saw a rise in the total units launched in Q1 2014 over previous quarter. Mumbai and Bengaluru together constituted around 50% of the total unit launches in Q1 2014.
|City||Q4 2013||Q1 2014||% Change|
|(No. of Units)||(No. of Units)|
Sanjay Dutt, Executive Managing Director, South Asia, Cushman & Wakefield says “Developers have taken a conscious decision to launch projects in the first quarter of 2014 as they anticipate sales to improve this year in the second half foreseeing economic stability that will most likely prompt purchase decisions from end users. In addition to this, some developments which were held up for approvals have also seen the light of the day, notably faster environmental clearances and approvals that have enabled developers to launch their projects in this quarter. However, as concerns about the inflationary trends in the economy and an expected adverse impact of the El Nino remain, we believe that a cautious approach needs to be maintained for residential markets that are not primarily driven by end-user demand. With the general elections already past the half-way mark, the industry and buyers are eagerly looking forward to some positive policy changes to boost the housing sector by the new government that emerges.”
The luxury segment of residential units witnessed a tremendous q-o-q rise of over 120% in Q1 2014, primarily due to a few units launched in Chennai. The largest quantum of launches in residential units was in the mid-end segment, registering an increase of over 90% over the previous quarter. There was a sharp drop in the launches of high-end units which declined to around 6,000 units, with largest number of units being launched in Mumbai.
|Segment||Q4 2013||Q1 2014||% Change|
|(No. of Units)||(No. of Units)|
In Q1 2014, rental values remained stable in Ahmedabad, Chennai, Hyderabad and Kolkata over previous quarter. The rental values in a few high-end segment submarkets of Bengaluru, Mumbai and NCR registered a q-o-q decline in the range of 3-10%, primarily due to large companies and individuals adopting a cautious approach in the wake of overall economic scenario and political environment in the country. On the contrary, a few mid-end segment sub-markets of Bengaluru, Pune, Thane (Mumbai) witnessed a q-o-q increase in the range of 2-14% primarily due to increased interest by tenants considering availability of residential units at decent rentals and in proximity to the workplaces.
In Q1 2014, mid-end segment dominated the q-o-q capital value appreciation charts, indicating favourable demand-supply scenario in this category. In Chennai, GST Road (an SEZ corridor) witnessed 10% q-o-q capital value appreciation, primarily due to high demand from professionals employed in proximity. In Bengaluru, select mid-end submarkets like North (comprising Hebbal, Bellary Road, Yelahanka, etc.), Off Central** (comprising Cox Town, Frazer Town, Benson Town, etc.), North-west (comprising Malleshwaram and Rajajinagar), Far South (Electronic city) and West (comprising Mysore Road and Uttarahalli Main Road) registered a q-o-q capital value appreciation of 3-7%. Significant infrastructure developments were the key drivers for capital value increase in Bengaluru submarkets. A notable trend in Pune was the increase in capital values of select mid-end sub-markets in Pune primarily due to launch of new projects at higher price points, rather than a “real” appreciation.
NCR submarkets of South-east (mid-end), South-west (high-end), South Central (high-end), Gurgaon (mid-end) and Luxury Category in Gurgaon saw a q-o-q capital value decline to the tune of 3%-9% on account of subdued transaction activity due to the existing high values which do not seem sustainable in the current market scenario.
Significant Q-O-Q rise in capital values
|City||Submarket||Segment||Capital value Range (INR/sf)||% change|
|Pune||NH4 Bypass (North)||Mid-end||3,800-5,500||6%|
Significant Q-O-Q drop in capital values
|NCR||Gurgaon - Luxury||High-end/Luxury||20,000-25,000||-5%|
In Q1 2014, nearly 2,300 units were launched in Ahmedabad, registering a q-o-q decline of 8%. Although the unit launches declined, number of project launches more than doubled; indicating absence of any significantly large new project (which was noted in a peripheral location during the previous quarter). During the quarter, new launches were concentrated in locations such as Makarba, Thaltej and Vasna in West Ahmedabad (33%), followed by Vastral in the East (21%) and Ranip in the North (19%). The affordable segment accounted for 45% of units launched in Q1 2014, while mid-end segment accounted for 55%.
With demand remaining stable, capital values were unchanged in Q1 2014 from the previous quarter. A number of developers delayed new launches and focussed on clearing existing unsold inventory. Considering demand is higher for affordable units having ticket sizes of INR 20-40 lakhs, transaction activity was relatively more in the peripheral locations of S.G. Highway and Bopal where such units are available mainly.
Bengaluru witnessed robust new launches of more than 16,800 units in Q1 2014, recording a q-o-q increase of 22%. The new launches were focussed in submarkets of South (Sarjapur Road, Electronic City, etc.) and East (mainly Varthur Road), contributing around 83% to the new launches. Preference to reside near workplaces and availability of good infrastructure aided healthy demand in these submarkets. Mid-end segment accounted for nearly 75% of the launches and approximately 18% were in the affordable segment. High-end segment launches registered a 57% q-o-q decline primarily due to subdued buyer demand in the wake of current economic scenario and political environment; further stimulated by developers focus on mid-end and affordable offerings.
In Q1 2014, capital values in the high-end segment of Bengaluru’s submarkets largely remained stable due to subdued demand and low new launch activity. However, capital values in select mid-end submarkets registered a q-o-q improvement in the range of 1-7%. Capital values in mid-end segment of North and North-west Bengaluru improved primarily due to enhanced infrastructure including Hebbal-Airport Expressway and metro rail (Peenya-Sampige Road: phase I, part 2). Whilst paucity of supply led to capital value increase in the mid-end segment of Off-Central** areas, far South witnessed demand from IT-ITeS population and West witnessed spill-over demand from select South-west locations.
In Q1 2014, more than 7,400 units were launched in Chennai’s residential market, registering a massive q-o-q increase of around 190%. The new units were primarily launched at Rajiv Gandhi Salai-II (34%) and Rajiv Gandhi Salai-I (12%) alongwith GST Road contributing around 6%. Evolution of Rajiv Gandhi Salai as IT-ITeS hub and existing connectivity to other parts of the city has led to significant real estate activity at this location in the recent past. 90% of the new launches in Q1 2014 belonged to the mid-end segment while high-end segment accounted for an additional 4%. This quarter also witnessed new launch of around 120 luxury units at Kotturpuram and Nungambakkam (which were the key contributors to overall luxury unit launches).
In Q1 2014, mid and high-end segment capital values largely remained stable in most of the submarkets in Chennai. This was primarily due to the surge in new launches, which provided varied options to the buyers. Only GST Road (an SEZ corridor) witnessed 10% q-o-q capital value appreciation in mid-end category, due to high demand from working professionals and further fuelled by new project launches at higher price points.
In Q1 2014, around 900 residential units were launched in Hyderabad, recording a q-o-q increase of 25%. The North-west quadrant of the city (Madhapur and Gachibowli) witnessed maximum activity and contributed 63% to the total launches. Persistent moderate demand due to proximity to IT-ITeS workplaces and proposed infrastructure projects such as metro rail drove the launch activity in this region. Mid and high-end segments accounted for 77% and 21% respectively of the total unit launches.
In Q1 2014, capital values in high-end segment remained stable across the city over the previous quarter. In the mid-end segment, select micro markets in proximity to the IT-ITeS and BFSI hubs such as Madhapur, Gachibowli, Kukatpally, Miyapur and Nizampet witnessed a marginal q-o-q capital value appreciation of 3%, primarily due to the persistent end-user demand.
In Q1 2014, nearly 6,700 units were launched in Kolkata; registering 3.5 times increase over the previous quarter. This significant increase was primarily due to launch of a large project in peripheral location of the city. Southern peripheral locations (Maheshtala and Joka) contributed nearly 70% to the new unit launches followed by North and North-east submarkets contributing 13% and 11% respectively. The affordable segment accounted for 57% of the new launches followed by mid-end segment with a 40% share. This quarter witnessed the launch of a theme-based project in collaboration with Disney UTV, which is the first of its kind in this region.
In Q1 2014, capital and rental values across most locations remained stable on a quarterly basis, except the South-east submarket (EM Bypass - Science City, Christopher Road, Pancha Sayar, etc.) that witnessed an increase of 3% in high-end segment capital values due to new project launches at higher price points.
In Q1 2014, approximately 10,700 units were launched in Mumbai; almost double the previous quarter. The increase was primarily due to launch of a new phase (around 6,000 units) in a large township project in the peripheral suburbs of the city. New launches during the quarter were concentrated in Dombivli (56%) followed by the Western Suburbs (15%), Thane (15%) and Central Suburbs (12%). The mid-end segment accounted for about 67% of the total units launched in Q1 2014, indicating the developers’ focus area amidst current state of the economy and political environment in the country.
Due to low demand, capital values in Mumbai remained stable during Q1 2014 over the previous quarter. Even new project launches were at competitive prices indicating the developers focus on generating sales at trending price points. Due to the subdued demand, a few developers also offered attractive discounts to clear existing unsold inventory, which remains the key focus in current situation.
In Q1 2014, nearly 6,500 units were launched in NCR; registering a decline of 18% from the previous quarter. Major residential activity in the region remained focussed on Noida, which contributed more than 85% to the new launches whilst the remaining came from Gurgaon. In the current uncertain economic and political environment, Noida residential sector witnessed demand due to the lower ticket priced offerings at this location. More than 95% of the total new units launched in NCR were in the mid-end segment and remaining 5% in the affordable segment. This is a notable trend as during the previous quarter majority launches were in the affordable segment (primarily along peripheral locations of Yamuna expressway and Noida extension). In an attempt to adjust to the prevailing market conditions, Q1 2014 new launches also included nearly 400 serviced studio apartments, targeting buyers with lower budgets and offering plans with assured rental returns alongwith property management by reputed hotel brands.
High-end segment capital values registered a q-o-q decline of 3-5% across submarkets of Delhi, primarily due to the subdued transaction activity in this region. Similar decline was observed in capital values of Gurgaon’s luxury segment. Noida did not witness any q-o-q change in capital values from the previous quarter, primarily due to stable end-user demand (considering its apt ticket price offerings).
In Q1 2014, nearly 3,950 units were launched in Pune; registering a 4% increase over the previous quarter. The quarter also witnessed the launch of a few high-end projects spread across diverse locations such as Pimpale Nilakh, Viman Nagar, Salisbury Park and Law College Road. The NH4 Bypass (North) submarket recorded a 33% contribution in launch activity during the quarter. Approximately 80% of new launches were in the mid-end segment and remaining in high-end segment. Due to increasing buyer affordability and rising input costs, this quarter did not witness any new launch of units in the affordable segment.
Due to launch of new projects at higher capital values, high-end segment capital values across majority of the markets recorded a q-o-q increase of 2-3%. Similarly, in the mid-end segment NH4 Bypass (North) and Baner saw a 6% q-o-q appreciation whilst Nagar Road, East and Pimpri submarkets also witnessed a 2% q-o-q uptick. The increase was primarily due to continued stable demand for projects in proximity to the IT-ITeS workplaces in Pune.
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