Unsold inventory decreased by 10% from 8.04 lakh units in Q4 2016 to 7.27 lakh units by Q4 2017
Mumbai, 22 March 2018: Fewer launches, subdued sales and muted property prices defined 2017 for the Indian residential real estate sector, according to a detailed report by ANAROCK Property Consultants.
With an annual decline of almost 50% in new launches and 15% decline in sales across top 7 cities in India, the sector was effectively shattered in 2017.
“A spate of policy reforms and structural changes literally crippled the sector,” says Anuj Puri, Chairman – ANAROCK Property Consultants. “Simultaneously and consequentially, it transitioned rapidly into a transparent and buyer-friendly one. With only end-users left to drive the market and investors more or less evaporating completely, developers throttled back severely on new launches to allow the market more scope to absorb the already staggering unsold inventory.”
A series of highly disruptive reforms, coupled with mounting unsold inventory and stringent RERA norms, kept developers on the back foot in 2017. Not surprisingly, instead of infusing new supply in the market, developers focused on executing their under-construction projects in order to remain RERA-compliant and remain relevant in the rebooted market scenario.
2017’s Depressed New Launch Readings
The top 7 cities recorded new unit launches of around 1.26 lakh in 2017 as opposed to 2.50 lakh in 2016.
“In terms of sales during 2017, almost all the cities recorded a decline when compared to 2016 – except Hyderabad, which recorded a 21% increase,” says Puri. “The decline in sales can be primarily attributed to weak buyer sentiments amidst the rather confusing new policy environment.”
Uninspiring Sales Figures
Restricted new launches in 2017 resulted in a significant reduction of unsold inventory levels across the top 7 cities. Overall unsold inventory decreased by 10% from 8.04 lakh units in Q4 2016 to 7.27 lakh units by Q4 2017. An uptick in the traction of ready-to-move-in and nearing-completion properties helped developers to clear a lot of the existing stock.
Prices across the top 7 cities remained largely range-bound in 2017, primarily due to the presence of significant unsold stock and cautious buyer sentiments. In 2017, the market clearly made a shift towards the affordable housing segment, with 44% of unit launches (55,000 units) coming in with price tags under INR 40 lakh. This is a major shift in the Indian real estate sector, and developers are now visibly aligning their supply with the budget ranges dictated by demand, so as to avoid any mismatch.
The seeds of reforms sown in 2017 will doubtlessly reap consummate benefits in the future. Although they caused nothing short of mayhem in the sector, these reforms serve the important purpose of eliminating unscrupulous players from the real estate ecosystem. Moreover, developers are likely to focus squarely on their core business and be customer-centric by launching the right kind of supply at the right prices.
Download the ANAROCK Residential Report 2017 here – http://bit.ly/2HTzeUy
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