Indian realty sector saw 50% decline in new launches in 2017: ANAROCK Report
A report by ANAROCK Property Consultants says that the Indian residential real estate sector was shattered in 2017 by fewer launches, subdued sales and muted property prices. The sector witnessed an annual decline of almost 50% in new launches and 15% decline in sales across top 7 cities in India.
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, the report said.
“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.”
The top 7 cities recorded new unit launches of around 1.26 lakh in 2017 as opposed to 2.50 lakh in 2016. Chennai recorded the highest dip in sales at 26% – from 17,800 units in 2016 to 13,200 units in 2017, MMR recorded 24% sales decline to 52,600, Kolkata’s sales dropped by 23% to 12,900 units, NCR’s sales dipped by 22%, Pune’s sales dipped by 6% and recorded sale of 29,400 units in 2017 whereas Bengaluru saw the lowest dip in sales at 2% – from 43,300 units in 2016 to 42,300 units in 2017.
“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.”
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.