Gurgaon, February, 10, 2016 – Residential buyers maintained a cautious approach in 2015, however, an increase in enquiries was witnessed towards the end offering hope in some cities, even though nearly 120,000 units across seven major cities were launched this year. Despite a decrease in home loan interest rates and various incentives offered by developers, the transaction volumes in residential real estate remained on the lower side across cities; the primary reasons of this restraint was increasing delay in the existing under construction projects, quality issues, and higher price points, etc.
“Although, it is difficult to forecast the real estate market which is highly sentiment driven in India, in 2016, the overall property markets are expected to continue to edge further into recovery. There are several factors that can be considered as key drivers for the sector in 2016, such as easing interest rate pressure, well performing commercial market, positive employment scenario and government proactive policies such as liberalised FDI policy, smart cities, housing for all, etc. Transaction volume in the residential sector will improve and the current oversupply in the market will get mitigated in the coming quarters, as the number of new project launches remained limited in almost all the cities”, says Surabhi Arora, Associate Director Research at Colliers International India.
Bengaluru continued its run in the commercial as well as the residential market as end users drove residential demand in 2015, witnessing the launch of nearly 22,000 new residential units. Nearly one third of the total units launched were concentrated in the southern and south-eastern belt comprising of locations such as Sarjapur Road, Electronic City and Bannerghatta Road. All launches in these locations catered to the mid segment category as developers launched new projects due to increased enquiries from both end-users and investors. The high office absorption by IT-ITeS sector was another factor which boosted the demand for new residential supply near these prime commercial hubs.
The Chennai residential market showed resilience as it witnessed signs of revivals despite natural calamity and low sales velocity. Nearly 12,000 new units were launched in 2015 as several locations along Old Mahabalipuram Road (OMR) witnessed launches in mid segment. Almost 40% of the total units launched in 2015 were concentrated in the post- Sholinganallur toll plaza belt consisting of locations such as Kelambakkam, Navalur and Padur.
A major market like Mumbai registered a decline in new launches, despite recording a slight recovery by the year end. Colliers recorded the launch of approximately 35,000 new units this year, which was about 40% less than the last year’s new launches. Even though, in 2015 the city witnessed various Private Equity transactions such as Altico Capital, IIFL Real Estate Fund and Primal Fund having invested in premium residential projects located in Mazgaon, Chandivali and BKC micro- markets respectively. Apart from this, in major land deals, Wadhwa Group bought 6.5 acres from Gopal Narang and Rajan Raheja and Tata Housing Development acquired a 7 acre plot from KEC International located in Pokharan Road 2, Thane.
It remained a dull year for the NCR market, as new residential launches took a step back. The year 2015 even ended on a cautious note for Pune as there was a marginal decline of about 4% in the new launches and transaction volumes. Premium projects were unable to attract buyers and a large share of overall transaction volume was contributed by mid-range and affordable category projects. Micro markets such as Baner, Hinjewadi and Wakad witnessed good traction and an increased office uptake from IT/ITeS occupiers and improved connectivity via Mumbai Pune expressway made a strong case for West Pune micro markets for residential properties.
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