Cushman and WakefieldIn its latest report, global real estate consultancy, Cushman percent Wakefield, reported that an estimated 88,000 residential units were launched by organized developers in the first half (Jan - June) of 2013 in major cities[1] registering an increase of approximately 11 percent over the same time last year.
The unit launches for the second quarter (Apr - Jun) totaled to approximately 47,000 representing an increase of 14 percent over last quarter. The mid-end segment continued to constitute majority (58 percent) of the overall launches during H1 2013.
Ahmedabad, Chennai, NCR and Pune witnessed a decline in new project launches in H1 2013 compared to the same period last year. Hyderabad witnessed the highest percentage increase in new projects launches at over 230 percent, while Bengaluru saw a rise of over 190 percent in total residential units launched in H1 2013 over H1 2012.
Mid-end segment has witnessed a y-o-y capital appreciation of about 13-20 percent. In select micro markets across the cities, the capital appreciation has even exceeded 20 percent.
Select cities saw fluctuation in rental and capital values during the Q2 2013 due to change in demand and supply dynamics and investment sentiments. Hyderabad's submarkets saw the maximum variation in capital values ranging from 5-22 percent owing to revision of guidance values.
Also, select micro markets of Bengaluru witnessed rise in capital values in the range of 15-21 percent in wake of limited supply and higher land acquisition costs. Meanwhile, some submarkets in Kolkata and Mumbai witnessed moderate capital appreciation in the range of 3-9 percent in Q2 2013.
NCR saw correction in the range of 5-9 percent in the high-end segment in the back drop of slow transaction activity coupled with cautious buyer sentiments.
Shveta Jain, Executive Director, Residential Services, Cushman percent Wakefield said, "The rise in launches of residential properties in key cities has been on account of clarity that certain markets have received on development plans and regulations in the last few quarters, especially in cities such as Hyderabad and Mumbai where the new development laws had been implemented."
"However, key concerns such as high land costs, spiraling construction costs and funding / working capital have remained a major challenge for developers while executing these projects. These factors have prevented developers from launching mid - ranged or affordable products that can potentially bring down the profitability of projects. Addition to these, developers are also crunched by recent RBI decision which warns banks and other financial institutions from providing capital upfront under schemes such as 80:20 or 75:25 that developers were seen to offer to purchasers."
| Residential Units Launch |
| City | H1 2012 | H1 2013 | % Change |
| (No. of Units) | (No. of Units) |
| NCR | 22,612 | 20,760 | -8.20% |
| Chennai | 12, 693 | 5,491 | -56.70% |
| Kolkata | 3,466 | 3,847 | 10.90% |
| Bengaluru | 7,558 | 22,219 | 193.90% |
| Mumbai | 13,929 | 18,093 | 29.90% |
| Hyderabad | 1,488 | 4,992 | 235% |
| Pune | 12,605 | 11,069 | -12.90% |
| Ahmedabad | 4,987 | 1,706 | -65.80% |
NCR
The total number of units launched in the high-end segment decreased by approximately 70 percent during H1 2013 compared to the same period last year. Also, NCR did not see any new launches in the luxury segment during the first half of 2013 due to increased availability of units in the secondary market that are nearing completion in this segment.
Gurgaon, an investor driven market, saw an increase in the number of units launched in the mid-end segment by approximately 16 percent in the first half of 2013 compared to same period last year.
On the other hand Noida witnessed a decline of 6 percent in the units launched in the mid-end segment during H1 2013 when compared to H1 2012 with developers focusing on the affordable segment attracting end users in the region. Studio apartments gained interest amongst buyers with the launch of approximately 3,600 units during H1 2013.
Investors and buyers are following a wait and watch approach to purchase and are evaluating as well as negotiating on the best available options in the market given the weak sentiments.
Further, new avenues for investment under the new draft Master Plan for Delhi-2021 has opened up lucrative opportunities for investment across residential zones in Delhi which is competing with the high-end and luxury availabilities in suburban locations.
The capital values of ready properties in Gurgaon declined by approximately 9 percent q-o-q in the luxury segment with increased availabilities. Prominent high-end micro markets such as South-Central and Central Delhi saw a price appreciation of 7-15 percent over the last year; however given the stagnant demand over the last few months, the prices have remained stable compared to the last quarter.
Moreover, given the prevailing cautious buyer sentiments, South-West and South-East Delhi witnessed decline in capital values over the year as well as the previous quarter.
MUMBAI
The first half of the year witnessed approximately 18,000 units launched, an increase of 30 percent compared to the first half of 2012. The new launches were concentrated in the central and western suburbs and peripheral locations of Thane and Navi Mumbai.
The high-end segment witnessed substantial growth in units launched compared to H1 2012 and was predominantly in western suburban locations like Malad, Goregaon, Bandra and Andheri.
A few developers reduced size configurations of newly launched apartments to enhance sales especially in South Mumbai locations where the ticket size reduced by 20-25 percent.
On the other hand, the capital values in the high-end segment at South, South Central and Western suburbs appreciated in the range of 17-24 percent over the year due to low availability of quality ready apartments; most high-end and luxury projects at these locations are still under-construction.
Launches in the mid-end segment grew 9 percent in H1 2013 compared to same period last year in locations like Borivali, Thane, Mira-road and Panvel. Average capital values of new launches have increased by 4-6 percent at these locations over the last one year.
Bengaluru
Bengaluru being an end-user driven market has witnessed highest number of launches with majority of launches (close to 90 percent) in the affordable and mid-end segment category. The residential market in the city has been less speculative with properties being affordable compared to other metros leading to continued investor interest.
The first half of this year witnessed a considerable uptrend in the number of launches with affordable and mid-end segment being the major drivers. The current year saw organized developers launching large affordable projects in peripheral areas like Budigere cross in East, Anekal Road-Attibele in South, Tumkur Road in North and Mysore Road in Western part of the city in order to tap the first time buyer segment along with the investor class.
Further, mid- endsegment projects were concentrated in Sarjapur Road in South along with Whitefield in East and Hennur Road, Hebbal in Northern micro markets. Buoyant demand from IT-BPM population in the price range of INR 40-80 lakhs prompted the developers to launch maximum projects in the mid-end category. Since, the city is also a preferred destination for private equity investors in residential real-estate market; the retail investors are also relatively comfortable in investing.
Moreover, with development of peripheral locations and developers offering residential units in various ticket sizes, the buyers have variety of options to choose from.
Meanwhile, the city also witnessed launch of over 450 units in the luxury category primarily in suburban areas like Magadi Road and Old Airport Road. These projects were essentially the spillover of previous year with developers wanting to capitalize on the location advantage.
CHENNAI
Chennai witnessed influx of approximately 5,500 residential units in the housing market during the first half of 2013, a significant decline of 56 percent over H1 2012 when more than 12,600 new units were launched. More than 4,500 (96 percent) of these new units were launched in the affordable and mid-end segments mainly in locations like Rajiv Gandhi Salai, GST, Velachery and Mogappair.
However, this is considerably lower than H1 2012 that saw more than 11,900 new units launched in the mid-end category alone.
During Q1 2013, a decrease in residential launches was witnessed majorly due to the delays in obtaining planning approvals, but the scenario improved during the last three months and an increase of 40 percent was recorded as more than 3,200 new residential units were launched in Q2 2013.
Of which approximately 700 and 200 units comprised of affordable and high-end segments. While locations like Tambaram, Maraimalai Nagar and Guduvanchery on GST Road witnessed the launch of affordable projects, Nungambakkam, Anna Nagar and Kotturpuram saw new apartment and villa projects being launched in the luxury segment.
KOLKATA
Around 2,295 residential units were launched during Q2 2013 representing a 47 percent increase compared to the previous quarter. Developers focused majorly on the mid-end segment with reduction in average size of 2 percent 3 BHK apartments.
Majority of the projects were launched in Rajarhat location in North East micro market followed by emerging South Peripheral and North Peripheral locations such as Garia, Narendrapur, Madhyamgram and Sodepur. Capital values in most micro markets, mid as well as high-end segments, appreciated in the range of 3-8 percent over the previous quarter on the back of steady demand and new project launches at higher price points.
HYDERABAD
Hyderabad being an end user driven market witnessed a surge in new launches with majority of it (close to 81 percent) in the mid-end segment category.
Madhapur/Gachibowli witnessed a huge surge in number of both affordable and mid-end
units launched due to increased demand and close proximity to HITEC city which adds to this region's attractiveness. Overall buoyant demand and low prices are the key driving factors for appreciation in number of units launched.
Luxury segment did not witness any new launches due to limited demand. All micro markets witnessed an upward trend in the capital values across all categories due to the revision in circle rates with the exception of Kompally, which did not witness any q-o-q appreciation.
PUNE
Pune, primarily being an end-user driven market witnessed the launch of approximately 4,400 units in Q2 2013, three-fourth of which were in the mid-end segment. Comparing the H1 2013 with the same time last year, a 12 percent drop in launches was observed. However, in a continuing trend, majority of launches were in the mid-end segment.
Locations that saw a large number of mid- end segment launches were NH4 Bypass (North) and East Pune primarily due to demand from IT employees. High-end launches were seen in various locations around the city, particularly the Baner - Balewadi belt and Kharadi.
Mid- end segment capital values for most locations in the city remained stable compared to the previous quarter while capital values in Aundh-Baner, North-East and East Pune appreciated by 4 percent. Capital values in the high-end segment remained largely constant compared to the previous quarter, except for locations around NH4 Bypass (North) which witnessed a marginal 2 percent appreciation. Although many projects are under construction, the prices have remained stable due to the developers' holding capacity.
AHMEDABAD
The first half of 2013 witnessed approximately 1,700 units launched in Ahmedabad, a decline of 65 percent compared to the first half of 2012. The launches were concentrated in peripheral locations of S.G. highway and S.P Ring Road.
With declining demand in the high and mid-end segment developers have shifted focus to the affordable segment which contributed close to 70 percent of the overall launches followed by the mid (16 percent) and high-end (11 percent) segment. Developers catering to the affordable segment have launched projects with 1 BHK configuration having ticket size of INR 16-20 lakhs. Capital values have remained stable over the past one year due to stagnant demand levels and rising input costs.
The new Development Control regulations which are expected to be passed in the second half of the year suggesting to increase the Floor Space Index is expected to result in increased residential launches. The move is expected to bring relief to developers by offering higher Floor Space Index; this is likely to reduce prices as developers are expected to pass on the benefits to buyers.
| City | Micro Market | Categories High/mid-range | Q2 2013 Average capital values INR psf | Q-O-Q % change |
| Mumbai | South Central | High-end | 25,000-65,000 | 8% |
| South | High-end | 40,000-83,000 | 9% |
| Central Suburbs | Mid-range | 8,000-11,000 | 0% |
| NCR | South-West | High-end | 45,000-60,000 | -5% |
| South-East | High-end | 25,000-40,000 | -7% |
| Gurgaon | Luxury | 20,000-29,000 | -9% |
| Gurgaon | High-end | 11,500-18,000 | 2% |
| Noida | High-end | 6,600-9,000 | 4% |
| Gurgaon | Mid-range | 7,500-11,500 | 4% |
| Bengaluru | Central | High-end | 18,000-30,000 | 0% |
| Off Central | High-end | 7,000-10,000 | 0% |
| East | High-end | 6,500-10,000 | 0% |
| North | High-end | 6,500-9,500 | 0% |
| South-West | Mid-range | 4,500-6,000 | 8% |
| Off Central* | Mid-range | 6,000-9,000 | 15% |
| Chennai | Boat Club | High-end | 23,000-30,000 | 0% |
| R.A Puram* | High-end | 17,000-23,000 | 5% |
| Kotturpuram | High-end | 14,000-18,500 | 0% |
| Poes Garden* | High-end | 20,500-28,000 | 0% |
| Nungambakkam | High-end | 14,000-25,000 | 0% |
| Anna Nagar | High-end | 12,000-17,000 | 0% |
| Adyar | Mid-range | 10,000-14,000 | 0% |
| GST (Poteri) | Mid-range | 2,600-4,500 | 0% |
| Velachery | Mid-range | 6,000-8,000 | 0% |
| T.Nagar | Mid-range | 10,000-16,000 | 0% |
| Mylapore | Mid-range | 12,000-17,000 | 0% |
| Mogappair | Mid-range | 5,000-7,500 | 0% |
| Hyderabad | Himayathnagar | High-end | 4,000-5,500 | 22% |
| West & East Marredpally | High-end | 4,000-5,500 | 20% |
| Jubilee Hills | High-end | 6,500-8,500 | 13% |
| West & East Marredpally | Mid-range | 3,000-3,500 | 10% |
| Madhapur / Gachibowli | Mid-range | 3,500-4,000 | 9% |
| Kolkata | South East | High-end | 6,000-10,500 | 8% |
| South West | High-end | 11,000-16,000 | 8% |
| North East | Mid-range | 2,700-4,000 | 8% |
| South | Mid-range | 3,800-6,000 | 5% |
| Pune | Nagar Road | High-end | 9,000 - 14,000 | 0% |
| Kothrud | High-end | 10,000 - 12,000 | 0% |
| Aundh Baner | Mid-range | 5,700 - 6,800 | 4% |
