July real estate launches dismal than last year

July real estate launches dismal than last year
27/10/2018 , by , in News/Views

For the past five years, despite the market players being optimistic, real estate (RE) sales have been down and inventory has been piling up, that is despite fewer project launches.

However, commercial real estate and the office segment, due to demand and leasing is in a healthy state.

According to a report released by Kotak Securities Ltd, for the month of July 2018, “Real estate sales across major cities clocked 22.2 million sq ft in July against launches of 7.9 million sq ft. We highlight that launches in July were significantly lower than the monthly average of 14.5 million sq ft seen in the past 12 months. Consequently, inventory across India dropped 10 percent to about one billion sq ft from 1.1 billion sq ft in July 2017, reflective of the decreasing launch activity.”

High inventory levels mean it will take developers months to clear the current volume, with the situation worse in the National Capital Region (NCR) and Mumbai Metropolitan Region (MMR).

“Across all metros, launches remained the lowest in Delhi NCR with only one million sq ft released in July in peripheral regions of Ghaziabad and Greater Noida. Net unsold residential inventory in NCR stood at 243 million sq ft as of July and is equivalent to 63 months of sales (based on average sales of trailing 12 months). Similarly, outstanding inventory in MMR remains the highest across metros at 290 million sq ft (equivalent to 54 months of sales),” the report said.

As far as property prices are concerned, it either remained stagnant or increased marginally. ‘Across India, average prices saw a slight increase in July averaging around Rs 6,100 per sq ft (Rs 6,000 per sq ft in Q1 FY19). On a monthly basis, prices remained largely flat in NCR at Rs 4,521 per sq ft (up only 1.4 percent year-on-year),’ stated the report.

In the office segment, according to the report, there is an adequate supply. “NCR region, comprising Gurugram and Noida, currently has the highest vacancy at about 29 million sq ft, which is likely to keep rentals in check, as future supply is expected to keep pace with incremental demand,” the report from Kotak stated.

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