- Affordable housing segment grew y-o-y at 6% in 2017
- Overall residential project launches declined by 35% y-o-y
- Mumbai accounted for 30% of total new residential units; also led in affordable launches
- Timely implementation of MahaRERA enabled cities in Maharashtra to take lead in residential resurgence
Affordable housing was the star for the year 2017 being the only category to show growth of 6% y-o-y over 2016. Even as developers grappled with the impacts of business fundamentals like RERA and the GST over their business, the clarity brought in by the government in affordable housing definition and benefits led to this growth. Mumbai contributed the highest to affordable category recording over 11,000 new units. Pune with the launch of 5,700 units saw second highest numbers, says Cushman & Wakefield .
But only the affordable housing segment seeing a rise in launches in 2017. New unit launches in residential saw a decline of -35% year – on – year (y-o-y) since 2016. The total estimated new residential units were approximately 74,000 across top eight cities of India with Mumbai constituting nearly 31% of the total new units followed by Pune constituting about 15% of all launches. Affordable housing saw a y-o-y growth of 6% with Mumbai leading the trend.
|Delhi – NCR||4102||2992||-27%|
The two cities in Maharashtra recorded growth in new launches as it was the only state to have absolute clarity on RERA implementation. In Mumbai, many significant affordable housing projects were launched within the Municipal limits of BMC, where the capital values are higher. Despite that, these projects saw good traction in the market.
|City||No of Units||% Change|
|Delhi – NCR||11358||9792||-14%|
Hyderabad saw a significant decline in the launch of residential units registering a decline of over 50%, mostly due to an already large inventory overhang. Bengaluru, which also saw a decline in new launches at – 47% y-o-y, generally saw a slowdown in construction activities, awaiting clarity on the Karnataka RERA which went through numerous iterations before acceptance. NCR market, on the other hand, saw a relatively lower impact on new launches reducing by -14% y-o-y in 2017. NCR market is also suffering from an oversupply in residential market due to a mismatch in demand and supply. While demand for projects closer to office locations is high, most project launches have been in the peripheral areas in the last few quarters. The end user interest in futuristic locations is usually low.
“2017 is a precursor to the much-needed stability of the residential market as seen in the nature of launches. The sector has seen an eventful year with drastic statutory changes. It will continue to realign itself to end users’ demands well into 2018. There will be stability in the development environment as most states are set to put the regulatory and the taxation policies in place, making development more standard process oriented. The end users’ interest in the residential sector will become positive as investments will be legally protected and there would be the commitment on timely delivery from developers. While residential markets will improve in 2018, It will need a few more quarters to experience healthy growth trend, backed by strong economic fundamentals and a firm legal structure”, says Anshul Jain, Country Head & Managing Director, India Cushman & Wakefield
The segments of Mid – ranged (-47%) and High end (-57%) remained subdued throughout 2017 both experiencing a slowdown in launches of units. With a clear concentration on affordable, these segments did not garner development interest. From the previous years, demand for Mid – ranged and high-end has been low leading to significant inventory overhang in these categories across the cities. Despite creating attractive deals through deferred payments, free offers and reduced rates, the demand for these segments remained low. Demand for these segments has been impacted for numerous reasons. Firstly, the end user consumers for these categories have remained restrained, not willing to take long-term commitments. For investors, other asset classes such as the equity markets and gold have produced a return on investment from real estate in the short term.