'New Home Launches Plunge 78% In 2017 From 2010 Peak'
Reforms such as the real estate law and the goods and Services Tax (GST) and demonetisation led to a steep decline in home launches in 2017, which plunged a full 78 per cent, say a survey.
According to a study by property consultant Knight Frank, at 103,570 units, homes launches in 2017 plummeted by staggering 78 per cent. The peak of the real estate boom in 2010 saw as much as 480,424 units being launched. New launches across the eight key metros of Mumbai, Delhi-national capital region, Bengaluru, Pune, Chennai, Hyderabad, Kolkata and Ahmedabad, declined 41 per cent in the second half of 2017 to 40,832 units, from 68,702 units in the same period in 2016.
"By the end of 2017, the residential sector had shrunk to a fraction of its size in less than a decade. Nevertheless the near-standstill triggered by the note-ban seems to have tapered with time," Knight Frank India Chairman Shishir Baijal said in the report.
During the second half of the year gone-by, Hyderabad recorded the steepest fall at 84 per cent. The other information technology dominated markets such as Pune, Bengaluru and Chennai fell by 58, 37 and 33 per cent, respectively, compared to the same period in 2016.
Sales declined marginally to 107,316 units in the second half of 2017, from 109,159 in the comparable period in 2016. But, from the sales peak of 2011 when 368,568 units were sold, this is a step decline of 62 per cent in 2017, at 228,072 units.
"Select markets wherein the real estate law has matured have seen developers re-launch projects at attractive prices which led to an uptick in sales in 2017. This strategic switch by developers led to a price reduction in most markets. It's a buyers' market today, and, we hope the momentum holds steady in the near future," Baijal added.
The report notes that for the first time, the sector witnessed price correction in 2017.
"The Delhi-NCR, Mumbai, Kolkata, Bengaluru, Chennai and Pune saw prices falling by two to seven per cent, while in Ahmedabad and Hyderabad this was two and three per cent, respectively," it said.
In case of office space, new completions increased seven per cent in 2017, to 32.7 million swuare foot (sqft) compared to 30.7 million sqft in 2016, but not on par with demand.
"Supply grew 13 per cent to 12.5 million sqft compared to 11.1 million sqft in 2016, and the headwinds in the technology sector and supply crunch for this subdued growth are to be blamed for this".
With inputs from Housing News