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  1. Real estate project launches up 46% in H1CY2018, but demand stagnant: Report

Real estate project launches up 46% in H1CY2018, but demand stagnant: Report

After a period of structural reforms such as demonetisation, REITS, Rera and GST, and some micro level moves like lifting of construction ban in Mumbai, real estate project launches in the first six months of 2018 saw a significant jump of 46% to 91,739 units year-on-year (y-o-y), a report released on Wednesday said.

By: | New Delhi | Published: July 26, 2018 3:44 AM
rera, real estate Knight Frank pointed out this drop, along with freebies by the builders, is effectively around 15% in markets such as Mumbai, and yet there is not enough traction and sales remain muted with woes for residential realty sector not likely to be over in the near term.

After a period of structural reforms such as demonetisation, REITS, Rera and GST, and some micro level moves like lifting of construction ban in Mumbai, real estate project launches in the first six months of 2018 saw a significant jump of 46% to 91,739 units year-on-year (y-o-y), a report released on Wednesday said.

However, the spurt in launches and a boost on the supply side haven’t really translated into buyers queuing up or loosening their purse strings as demand stayed stagnant even with prices dropping in big realty markets such as Mumbai and Bengaluru by about 9% and 8%, respectively, the report by real estate advisory and consultancy firm Knight Frank added.

Knight Frank pointed out this drop, along with freebies by the builders, is effectively around 15% in markets such as Mumbai, and yet there is not enough traction and sales remain muted with woes for residential realty sector not likely to be over in the near term.

“Reforms are all in place, developers have adapted to new norms today and supply side impediments like lifting of construction ban, announcement of Mumbai Development Plan 2034 have largely sorted out over the last 24 months till the first half of 2018 and developers have also responded to pricing and right sizing of apartments but demand is yet to take off,” said Shishir Baijal, chairman and managing director , Knight Frank.

Knight Frank, though, says consumers come with a time lag: “If no uncertainties crop up in the market like with the elections due in 2019, with whatever we are seeing today we expect good traction with shrunk ticket sizes as buyers do a wait and watch before they come back to the market,” said Dr Samantak Das, chief economist and national director, research, at Knight Frank.

Along with this spurt in launches, other visible trends for the real estate sector are increased focus by the builders on lowering ticket sizes. Largest markets in the country Mumbai and Bengaluru accounting for 56% of the total supply in HI of 2018 experienced a significant rise in the share of units launched in under a crore and the `50-lakh price bracket.

A worrying trend for the developers in the report is that distress is visible as the project life cycle continues to increase and the quarters to sell the inventory are stagnant at around three years since 2015 due to a drastic drop in launches then and it is made worse by increase in launches, a drop in prices and the demand yet to take off.

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