Luxury housing supply triples in two years since DeMo

The luxury housing market is one of the hardest-hit real estate segments post-demonetisation. The government’s continued focus on affordable housing coupled with the surgical strike on high-value currency denominations in November 2016 took the sheen off luxury housing for two years in a row. As a result, developers restricted new supply in the luxury category across the top seven cities.

According to recent research by property consultant Anarock, while the affordable and mid-segment housing sectors continued to dominate the overall supply in H1 2019, luxury and ultra-luxury housing also saw a resurgence.

As many as 16,100 new units have been launched in the luxury segment priced above Rs 1.5 crore across the top seven cities – a 3.07 times growth over 5,240 units launched in H1 2017.

Effectively, new luxury housing supply has more than tripled since H1 2017 (the period immediately after demonetisation). In fact, H1 2018 saw new luxury category supply increase by 40% since H1 2017 to stand at 7,350 units across the top seven cities.

Predictably, Mumbai Metropolitan Region (MMR) and the National Capital Region (NCR) dominated the new luxury supply in H1 2019, accounting for a 59% overall share, followed by major southern cities, with Bengaluru and Hyderabad seeing the launch of 2,210 and 2,070 units respectively.

On further segregation of the available data, it emerges that the budget range of Rs 1.5 crore to Rs 2.5 crore saw the maximum launches with 9,940 units. The remaining 6,610 units were launched in the higher price bracket of Rs 2.5 crore upwards.

City-wise break-up in the price range

MMR saw the launch of 2,500 ultra-luxury units (from 1,150 units in H1 2017)

Hyderabad saw the launch of 1,170 ultra-luxury units (from just 180 units in H1 2017)

NCR saw the launch of 870 ultra-luxury units (from just 85 units in H1 2017)

Bengaluru saw the launch of 800 ultra-luxury units (from 275 units in H1 2017)

Pune saw the launch of 570 ultra-luxury units (from zero units in H1 2017).

“In sharp contrast to the trend seen in previous years when it was primarily investors who drove demand in luxury housing, this segment is almost completely end-user driven today. HNIs from India and NRIs cashed in on the prolonged slowdown and the more or less stagnant prices and best-buy deals in their preferred cities,” said Anuj Puri, Chairman, Anarock Property Consultants.

Unsold luxury housing stock declining

In terms of unsold luxury housing inventory, as many as 86,430 units are piled up across the top 7 cities as on Q2 2019, an annual decline of 2%. Of this, MMR alone has a 56% share.

As of Q2 2019, nearly 46,200 luxury homes are unsold in the price bracket of Rs 1.5 crore to Rs 2.5 crore, while the remaining 40,230 unsold units fall in the over Rs 2.5 crore budget.
In Q2 2018, unsold luxury housing stock priced Rs 1.5 - 2.5 crore stood at 48,160 units, and at 39,690 units in the Rs 2.5 crore and above budget range.