News: While Mumbai, Bengaluru & Pune grow, NCR share in housing sale dip to 9%: Report-16-08-2020

https://economictimes.indiatimes.com/industry/services/property-/-cstruction/while-mumbai-bengaluru-pune-grow-ncr-share-in-housing-sale-dip-to-9-report/articleshow/77577219.cms

Synopsis

In 2010, every investor wanted to buy houses in the National Capital Region hoping prices would appreciate quickly and the market accounted for a third of all residential housing sales in Indian cities. A decade later, a lot of developers have made money, but the investors are realising that they didn't get adequate returns and the market is now sitting on unsold inventory of 1.1 lakh houses.

NEW DELHI: NCR's real estate has lost its sheen— the region now contributes just 9% of sales to overall cities' tally, selling a tenth of its peak numbers while other cities including Mumbai, Bengaluru and Pune are now 2-3 times bigger, surging both in terms of sales as well as investor return, according to a study by Knight Frank that analysed data of rst half of 10 years of top 8 cities. In 2010, every investor wanted to buy houses in the National Capital Region hoping prices would appreciate quickly and the market accounted for a third of all residential housing sales in Indian cities. A decade later, a lot of developers have made money, but the investors are realising that they didn't get adequate returns and the market is now sitting on unsold inventory of 1.1 lakh houses, with the age of unsold inventory being 53 months— highest in the country. The Covid-19 crisis might push the market further into disarray. “Traditionally, NCR has been an investor driven market while other markets are end-user driven. With prices not increasing, investors have moved away, crashing the housing market in NCR,” said Mudassir Zaidi, executive director (north), Knight Frank. Nearly all eight cities witnessed sales and launches fall steeply due to Covid-19 pandemic but NCR was the worst aected market with sales and new launches capitulating 73% and 82% YoY respectively during H1 2020. Sales in traditionally end-user markets like Bengaluru and Hyderabad also fell sharply by 57% and 43% YoY respectively during H1 2020. The National Capital Region (NCR)’s residential market was already in a prolonged slump due to several factors such as demonetisation, Goods and Services Tax (GST), Real Estate (Regulation and Development) Act, 2016 (RERA), the ongoing liquidity crisis impacting the developer community and a vast percentage of stalled residential projects in major peripheral markets

During 2019, NCR witnessed a slow recovery in residential sales volume as well as a steady inow of new launches as real estate developers reassessed demand in an end-user driven market, unlike in 2010-11, when it was primarily investor driven. However, with the Covid-19 pandemic outbreak in March 2020, the residential stage which was set for recovery was again turned topsy-turvy. “Real estate sector which was slowly coming up by March was hit with a complete halt in construction and sales activities by March last week. We may witness resizing of units, discounts, amenities and special payment schemes to be oered by developers to create demand, especially during the upcoming festive season,” said Samir Jasuja, founder and managing director at PropEquity. Mumbai accounted for 30% of the total sale in 8 cities and maintained the average between 22-25% throughout the decade and with 31.32 % share in H1 2020, it saw the highest share in a decade. “Mumbai and Delhi have always behaved very dierently when compared purely on pricing. The pandemic has denitely created a stressful market environment for developers as well as the homebuyers who were actively looking at properties. Mumbai market is seeing demand towards the aordable segment in areas such as Virar, Navi Mumbai and Thane whereas the Delhi-NCR especially Noida is burdened with higher levels of unsold inventory and buyers in this area prefer ready-to-move inventory,” said Farshid Cooper, MD, Spenta Corporation. Bengaluru residential market has been growing steadily and now accounts for 20% share against 7.6% in 2010. The COVID19 pandemic has pushed NCR behind Pune. Among the micro markets in NCR, Gurugram accounted for a 27% share of total sales. In H1 2020, Noida accounted for nearly one-third of NCR’s new supply with a 32% share of total launches. The new supply declined abruptly by 90% YoY over H1 2019 due to an oversupply of residential units, no new projects were launched in Greater Noida. “Both Noida and Gurugram have seen signicant fall in sales and new supply (new launches) this year.The pandemic has simply aggravated the already existing problems of builders across the two cities. The market was already reeling under a liquidity crunch in the light of the NBFC crisis that began in mid 2018. With sales plummeting, it is likely that the sector will remain impacted for,” Ankush Kaul, President (Sales and Marketing), Ambience Group.