Average ticket size of residential units declines 14% in 2016: Cushman & Wakefield

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Published: March 15, 2017 4:56:20 PM

The ticket size of new launches in the residential segment across top eight cities saw an average decline of 14% year-on-year (y-o-y) in 2016. This was a consequence of many developers recalibrating their market strategies that involved reducing effective cost of their property and restricted new launches in order to reduce their inventory holding.

The government has been resilient in its efforts to create affordable housing and achieve its target of ‘housing for all by 2022.

The ticket size of new launches in the residential segment across top eight cities saw an average decline of 14% year-on-year (y-o-y) in 2016. This was a consequence of many developers recalibrating their market strategies that involved reducing effective cost of their property and restricted new launches in order to reduce their inventory holding. In majority of the cities, developers have sought to rationalize ticket sizes, especially in the high-end and luxury segments, which has been hit the most, said Cushman & Wakefield today.

In a report Cushman & Wakefield said that in accordance with the market sentiments, the total number of new housing units declined during the year by 11% to approximately 113,000 units. Of this, mid housing segment accounted for 56% of the total unit launches followed by value housing segment at 32%. On a y-o-y basis, value housing segment noted an increase of 22% to more than 36,300 units. The high-end segment, on the other hand, was impacted the most, wherein launches almost halved to 12,000 units during the year.

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Note: Figures rounded off to the nearest multiple of 50

Anshul Jain, Managing Director, India, Cushman & Wakefield, said, “The government has been resilient in its efforts to create affordable housing and achieve its target of ‘housing for all by 2022,’ and is taking steps to build in benefits for developers to participate. Post the demonetization, markets have witnessed a slow uptake of residential properties on account of price and value mismatch. Consequently, developers are also relooking at their strategies to create better value for home buyers. The clarity on affordable housing’s definition provided by the government in this year’s Union Budget along with the benefits accruing from the infrastructure status to affordable housing projects should bring in a spurt in new launches in the later part of the year, albeit these are most likely to be in suburban and peripheral locations.”

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In terms of projects that have already been launched and where units remain unsold, developers are offering discounts and schemes to decrease their inventory and these schemes will continue for a while till the markets finds a balance. 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 by either offering attractive prices or smaller units. This, along with reduced bank loan rates are expected to create some velocity in the sales by the end of the year and going into the next year, he said.

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