The ticket size of new launches of residential units across the top eight cities saw an average decline of 14% on a year-on-year (y-o-y) basis in 2016, according to the latest report from Cushman & Wakefield (C&W). Restricted new launches and reduction in “effective cost of their property” by the developers were the prime reasons for the decline in ticket size. In the majority of the cities, developers sought to rationalise ticket sizes especially in the high-end and luxury segments, which has been hit the most, it said.

In line with market sentiments, the total number of new housing units declined during the year by 11% to around 1.13 lakh units. The high-end segment was impacted the most, wherein launches almost halved to 12,000 units during the year. The mid-housing segment accounted for 56% of the total unit launches followed by the value-housing segment at 32%. On a y-o-y basis, value housing noted an increase of 22% to more than 36,300 units.

However, all the measures of attracting buyers through schemes and offers hardly resulted in sales numbers. Analysts said home sales slumped an estimated 35% in November and December, post-demonetisation, and that clearly impacted real estate companies. Oberoi Realty, for instance, posted a sharp 60% y-o-y decline in its consolidated net profit to R85 crore in the three months to December 2016.

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Post-demonetisation, foreign brokerage CLSA published a report stating that, given the widespread anticipation of lower prices, customers will need to be nudged, whether by way of price cuts or lower interest rates, if sales are to increase meaningfully. Even large, pedigree companies such as Prestige Estates, Sobha Developers and DLF, among others, hardly sold any inventory in December, resulting in floundering financial performance during the quarter ended December 2016.

Anshul Jain, managing director, Cushman & Wakefield, India, points out that discounts and schemes could be the order of the day in 2017 as well. “Post-demonetisation, projects that have already been launched and where units remain unsold, developers are offering discounts and schemes to decrease their inventory. Further, the ticket values of new units being launched may see some change this year, as many developers are working on lowering these to increase the affordability of their units either through attractive prices or smaller units,” he said.