Launches of residential units rose 25% year-on-year in the three months to March, according to a Cushman & Wakefield study, reports fe Bureau in Mumbai. The improvement comes off a low base since fresh supply had fallen by over 60% in the past two years. Still, 31,200 units came into the market across eight top cities. Interestingly, 88% of these are in the affordable to mid-end segment, signalling demand is led by first-time home buyers and not investors. Most units are located in Bengaluru, an end-user-driven market.
Prices of new units, the report notes, have come off by 35% in Mumbai in the past two years while in Pune, the fall has been less steep at by 25%. In Bengaluru, however, prices are up 20% whereas in Delhi-NCR, they have stayed flat.
What stands out is the downsizing of the units launched. Unable to sell large apartments, developers have been trimming apartments to fit the budgets of home buyers. Radius Developers, Wadhwa Group, DB Realty and Sobha Developers are among those that have admitted to building smaller apartments given unsold industry has piled up to an estimated 700,000 units.
Launch prices declined across cities, 35% in Mumbai
Percentage increase in launches led by the affordable segment
Highest number of launches in Bengaluru, Delhi-NCR & Pune
Number of projects launched increased by 18% y-o-y
Average unit size of apartments declined across cities, down 19% in Bengaluru
For instance, in April last year, Sobha launched Sobha Dream Series, an offering with apartments of between 650 sq ft and 1,200 sq ft, priced between Rs 50 lakh and Rs 70 lakh. Analysts say the strategy is a good one and will allow the builder to offer, on average, 1 million sq ft of sales annually. The management confirmed there was a good demand for these flats.
Apartment sizes have shrunk by about a fifth in Bengaluru over the past two years whereas in Mumbai and Kolkata, they have reduced by 11%. Delhi-NCR too registered a reduction of ticket size by 10%, the report noted. Shveta Jain, ED, residential services, Cushman & Wakefield, said making home purchases more affordable is crucial since buyers have become extremely price sensitive.