Against the backdrop of the demonetisation drive and the announcement of RERA implementation, market sentiment was suppressed and impacted the new project launches significantly during H2 2016. For Mumbai, H1 2017 was marked by the finalisation of the RERA’s norms and the website launch for registration of projects. Although developers were expecting it, the transition towards a RERA-compliant regime has been difficult for many. In H1 2017, we noticed a slight improvement in supply to 14,000 new launches (including 3,800 pre-launches) in the Mumbai Metropolitan Region (MMR) and its suburbs representing a 16% increase over H2 2016.
Strong office sector performance indicates a healthy demand scenario for the residential sector in medium to long term. Colliers forecasts the mid-range segment would continue to drive sales as the festive season approaches in September and October and developers offer various promotions and attractive payment plans amidst a soft home loan interest rates environment.
Private equity investment was sustained with notable investments by KKR India Asset Finance Management, Edelweiss Group and the HDFC Realty Fund.
After the instability in the market at the beginning of 2017, the residential sector is now recuperating. With the notification of Tamil Nadu RERA, Colliers would advise developers to obtain all necessary approvals on time, pay attention to project planning, use modern construction technologies to speed up the development process and manage project funds efficiently to avoid delays and align for a smoothertransition towards RERA compliance.
Chennai’s residential market witnessed the launch of nearly 5,300 residential units, representing a rise of 19% from H2 2016. Of the total launches, 33% were concentrated in peripheral locations of the city's south quadrant along Old Mahabalipuram Road (OMR), Grand Southern Trunk (GST) and East Coast Road (ECR). Reputed developers in the mid-market category accounted for about 70% of the total launches.
In H1 2017, the Pune market witnessed about 4,034 new residential unit launches mostly in the mid-range segment. Although the government has granted infrastructure status and incentives to affordable housing, we have not observed much expansion in this sector from Pune developers. Developers are still exploring the feasibility of such projects in Pune. The average capital value of mid-range segment projects is already in an affordable range of INR4,000 - 5,000 per sq ft (USD 62 -77 per sq ft).
NCR- ~3900 units were launched in NCR in H1 2017.
In line with an earlier forecast by Colliers, the new launches in Gurgaon fell to an all-time low of only 3000 new units in H1 2017. About 90% of the total unit launches were in the affordable category under the government initiative of Pradhan Mantri Awas Yojna which was specifically designed for the affordable housing segment. Majority of the units launched in H1 2017 were in the price band of INR2-2.5 million (USD31,000-38,800) that caters to the affordable segment in Gurgaon.
As per Colliers, registration under RERA should start in Q3 2017 and it is likely to take at least six months for developers to become accustomed to the new regulation. Thus, Colliers expects new launches to remain subdued in H2 2017, but sales are expected to revive during the festive season primarily in ready-to-move-in projects as most developers would provide discounts and attractive payment plan options.
The completion of projects and the end-user interest in the ready to move in projects kept the market alive in H1 2017. Most of this demand was concentrated in newly developing sectors such as 72 to 78, sector 100, 107, 137 and Greater Noida West. Developers refrained from launching new projects in H1 2017 and focused on completion of existing projects. About 3,000 units got completion certificates in the last six months, while new launches hit bottom at under 1,000.
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