Note ban, real estate laws dent new launches

New launches in the housing sector have declined 8% in eight major cities — Delhi, Bengaluru, Chennai, Kolkata, Hyderabad and Pune — in the last one year to March 2017, owing to demonetisation and the passage of a new real estate law by Parliament, says a survey report.

According to the latest report from Cushman & Wakefield, the top eight cities witnessed residential launches of approximately 25,800 units in the first quarter of 2017, registering a 16% decline from the corresponding period, last year.

“A closer look at the trend indicates that launches have seen a steady quarter-on-quarter (QoQ) decline for the last four quarters, corresponding with the announcement of the Real Estate Regulatory Act (RERA) 2016 in March, last year, and the demonetisation exercise in November 2016. Launches in the residential sector have declined by about 8% during the period April 2016 to March 2017, compared with the same period in 2015-16,” the report said on Monday. However, in the last one year, the share of the affordable segment in total launches has improved to 30%, compared with 25% in the same period in 2015-16.

The share of high-end and luxury segments reduced to 11%, from 13% during the same period. While sales have been weak across segments, it has been prominent in the high-end and luxury segments over the last quarters owing to demand-supply mismatches.
According to Cushman & Wakefield Managing Director (India) Anshul Jain, “Launches in the residential sector are expected to remain restricted over the next two to three quarters as developers will be making intrinsic changes to their business structure, operations and marketing strategies to comply with RERA norms.”

“Capital values which are already reduced in selected locations within markets such as Delhi NCR, Bengaluru and Mumbai, will continue to remain under pressure in the coming quarter as the markets readjust in the post RERA and GST regime,” he said.

The combined impact of a prolonged slowdown in sales and the pressure of mounting inventory led to a price decline in cities such as Delhi-NCR, Bengaluru and select markets in Mumbai during the first quarter of 2017. In Delhi-NCR, quoted capital values softened by 1-3% in both the mid- and high-end segments across most of the submarkets from the previous quarter.

Bengaluru too witnessed rationalisation of prices in most of the submarkets across mid and high-end segments.