There is little good news from the residential real estate sector. Sales of housing units continue to fall across the country; so do new launches. A new report by real estate research and analytics firm PropEquity states that sales of housing units fell 10 per cent across India's top nine cities to 52,885 units in the third quarter of 2019 versus the year-ago quarter. Sales fell nine per cent over the second quarter of 2019.
The nine cities include Gurgaon, Noida, Mumbai, Kolkata, Pune, Hyderabad, Bengaluru, Thane and Chennai. The biggest year-on-year drop in sales was witnessed in Chennai where absorption nosedived 25 per cent, followed by Mumbai at 22 per cent and Hyderabad at 16 per cent. Noida dropped 11 per cent. Sales, surprisingly, improved 7 per cent in Gurgaon and 1 per cent in Pune over the year-ago quarter.
The slowdown in housing sales is largely due to fewer new launches, lack of buyer confidence in older under construction projects and liquidity crunch in the market, the firm noted.
New launches dropped 24 per cent to 32,834 units in the September quarter versus the year-ago period. Launches have slid since the residential real estate market is rife with developer consolidation - developers with poor track record of delivery have no takers and are being forced out of the market; those with good track record and stronger balance sheets are expectedly gaining traction.
On the positive side, PropEquity noted that 2019 has, thus far, performed better than 2018 in terms of projects getting completed. There is demand for ready-to-move in properties as buyers are reluctant to take chances after experiencing defaults in delivery of apartments even from reputed developers.
"Demand has been definitely impacted in the last quarter with buyers delaying decisions. The consolidation of developers has led to fewer new launches. However, in the last quarter, projects launched by leading developers were absorbed in record time. For example, Ultima, a ready-to-move in project by DLF in New Gurgaon recorded sales of over 70 per cent inventory (over Rs 700 crore) in a week's time," Samir Jasuja, Founder and Managing Director of PropEquity, noted.
His firm's data stated that the average price of unsold stock inched up by about 2 per cent compared to the year-ago quarter while unsold stock dropped eight per cent owing to a huge drop in supply during the period.