High vacancy levels and rising construction costs led to a slowdown in construction activity, leading to a decline in new launches, and further delay in project completion timelines, says the report. Liquidity issues and an increasing inventory caused developers to shift their focus from new launches to the completion of existing projects.
While the premium housing segment saw a steady interest from high net worth individuals (HNIs) and non-resident Indians (NRIs), end-user demand in the high-end and mid-end segments remained low. The depreciating rupee, which tumbled to a series of record lows during 2013, resulted in an increase in NRI enquiries for property in India.
Developers reduced prices across select projects and offered discounts or marketing promotions to attract buyers in micro-markets with high inventory levels.
According to CBRE, Delhi NCR witnessed capital appreciation across most micro-markets. Capital values in locations such as Sohna Road and MG Road in Gurgaon increased by 45% owing to strong demand for high-end properties over the last review period. Mumbais housing market remained largely stable, with a slight appreciation in select premium micro-markets. The exception was central Mumbai, where values declined by 45%, owing to sluggish demand, in comparison to the first half of 2013. While prices appreciated in Bangalores Whitefield, the Outer Ring Road (ORR), Koramangala and Hebbal due to enhanced housing demand; a cautious home buyer sentiment continued to keep capital values stable in the luxury and high-end segments of Kolkata and Hyderabad.
Home buyer sentiments remained cautious and subdued due to high price points, with preferences shifting to secondary and emerging micro-markets of leading cities. Housing demand in the high-end and mid-end, as well as in the luxury segment, is likely to remain sluggish across Indias leading cities during the first half of 2014, due to the subdued, pre-election macro-economic environment, said Anshuman Magazine, chairman and managing director of CBRE, South Asia Pvt. Ltd.