A report released by JLL has said that residential apartments sale in all four quarters of 2016 was higher than new units launched.
With residential apartments sales higher in 2016, driven by end-users, developers across the country are right-sizing and right-pricing their offerings according to end-users. A report released by JLL has said that residential apartments sale in all four quarters of 2016 was higher than new units launched. The residential apartments sale were higher in 2016 after 2008. This trend was seen is 1Q2017 too and is likely to continue for another couple of quarters on the back of RERA and expected July 1 implementation date of GST.
Ramesh Nair, CEO & Country Head – JLL India said,”Comparing the five quarters, the number of units sold vis-à-vis number of new units launched was the highest in 3Q16 – when it exceeded new launches by more than 10,000 units at a pan-India level. In 4Q16, demonetization slowed down speculator activity and from then on, sales have been largely driven by end users. Developers have rediscovered the value of end users and have been right-sizing and right-pricing their offerings accordingly.”
He further added that traditional cash flows during a project’s lifecycle changing due to an evolved policy framework and compliance, developers are busy changing their business models too. This, coupled with slower sales in recent years, has led to the ongoing slowdown in new unit launches. The industry is also witnessing consolidation during recent quarters, which is expected to continue in the coming years.
Real estate developers were hit by global financial crisis (GFC) in 2008. However, after the implementation of RERA and pro-consumer policy moves by the government, developers are consciously trying to reduce inventory across cities by gradually reducing the number of launches and markets are maturing due to the emerging supply-demand realities as well as the changing policy framework.
City-wise, the difference in new units launched and units sold is the starkest in Delhi-NCR. Interestingly, the trend is clear across all the metros – Delhi-NCR, Mumbai, Bangalore and Chennai while the difference is negligible in Kolkata. Although the number of new unit launches looks greater than units sold in both Pune and Hyderabad, a closer look reveals the true picture.
In Pune, even as the units launched reduce marginally every quarter, these are largely situated in projects along the city’s fringe areas having smaller configurations. In Hyderabad, launches are expected to stabilise through 2017 because a significant increase in launches could lead to unsold inventory piling up. Both these markets are expected to align to the pan-India trend in one or two quarters.