Rise In Sales Numbers, Fall In Inventory Signal Recovery For Realty: Icra
The collective efforts made by the stakeholders seem to be bearing fruit. According to a report by rating agency Icra, India’s housing market has seen some recovery in the recent past.
Let us look at the key findings of the report, the findings of which are based on a sample size of 11 listed entities.
Sales improve: According to the report, home sales improved by 29.3 per cent year-on-year (YoY) during April-December in 2017. The report says that real estate companies sold 17.26 million square foot (sqft) of space during the nine-month period, against 13.35 million sqft in the year-ago period. The value of the area booked during the nine months also rose to Rs 11,651 crore, from Rs 9,205 crore in April-December 2016.
Inventory decreasing: The time required to sell the unsold housing inventory decreased to 12 quarters, compared with 14 at the end of March 2017. This change was due to a healthy pick-up in sales velocity, says the report.
New launches fall: The real estate law has put in place strong penalties for project delays. Consequently, new project launches have been consistently falling as developer put all their focus on completing their under-construction projects. Resultantly, new launches dropped to 10.8 million sqft, against 18.7 million sqft in the said period. According to the rating agency, there has been a cautious approach towards new launches, given the muted demand over the last few years.
Collections fall: From Rs 9,735 crore in April-December 2016 to Rs 9,456 crore in April-December in 2017, there has been a three-per cent decline in collections. The report attributes this fall to the implementation of the real estate Act.
Biggies getting bigger: According to the agency, the large listed players may be on their way to get completely out of the lull with the demand for their unsold inventory rising.
"The pick-up in demand, coupled with the limited new launches, has resulted in an improvement in the QTS, which is being viewed as an early sign of recovery, especially for the organised players gaining market share," Icra Vice-president and Sector Head Shubham Jain said.
Reform-hit: The combined effect of demonetisation, the real estate Act and the Goods and Services Tax, says the report, has kept the sector in a phase of stabilisation and consolidation. "These events have been the gamechangers, creating a more transparent and well-balanced sector, and developing stakeholder confidence in it," the agency report said.
With inputs from Housing News