A new report by Anarock Consultants says that sales of residential real estate units, mostly apartments, fell 15% in 2017 to about 2.05 lakh in India’s top seven cities.
Despite the double whammy of RERA and demonetization, 2017 saw 1.26 lakh new units being announced.
This was, however, almost 50% lower than the 2.5 lakh new projects announced in 2016.
READY TO MOVE
At the end of 2017, the total number of unsold units in announced projects was at 7.27 lakh. In other words, if real estate sales continue at the same pace as seen in 2017, it would take 3.5 more years for the already announced projects to be sold.
However, not all these unsold apartments and villas are ready to move in.
In fact, out of the 7.27 lakh units, only 9% or about 65,500 units, are at the ready to move stage.
Consumers are increasingly preferring ready-to-move properties due to their easy availability.
At the same time, more and more inventory projects are moving into the ready-to-move category as they get completed. This year, says Anarock Property Consultants, one fourth of inventory is scheduled to achieve completion.
CITY SALES TRENDS
Against the average drop of 15% in sales for the seven cities as a whole, the IT cities of Bangalore and Pune saw drops of just 2% and 6% respectively.
Hyderabad, which also gets a lot of its demand from the IT sector, actually saw sales increase by 21% during the year compared to 2016.
Meanwhile, the non-IT cities reported sales declines of between 20%-25% in 2017.
The biggest sales decline was seen in Chennai at 26%, followed by Mumbai Region at 24%, Kolkata at 23% and the National Capital Region at 22%.
Due to relatively resilient sales, the number of unsold properties — including those that are still being constructed — fell sharply in the three IT cities of Bangalore, Pune and Hyderabad.
In Bangalore and Hyderabad, inventory fell 21%, while it fell 14% in Pune.
This was partly because of a fewer number of new projects coming online. In all these three cities new project announcements fell by about 60%.
The decline in inventory in Chennai was due to a lack of projects in the pipeline, partly due to the floods of 2015.
New projects continue to be relatively rare in Chennai.
In 2017, new projects announced fell 72% to just 4,400 units (see chart), the lowest of all seven cities.
On the other extreme was the Mumbai region.
Here, new launches fell only 33% — compared to the 60% decline seen in IT cities. Not surprisingly, unsold inventory fell just 2% in 2017, compared to the 20% decline seen in IT cities.
Nominal prices remained largely static in all the markets.
Hyderabad, which was the only city to see an increase in real estate sales in 2017, also saw the biggest increase in nominal prices at 4%, followed by Bengaluru at 3%, Pune at 2% and Chennai and Kolkata at 1%.
Mumbai saw flat prices while the NCR saw a decline of 1%.
These numbers do not mean much, as real prices would have fallen in all the markets. That is because even if a property worth Rs 50 lakhs in 2016 continues to command a price of Rs 50 lakhs in 2017, the actual value of the property has declined because 50 lakhs in 2017 is not worth the same as 50 lakhs in 2016 due to inflation.
You can also read the full report here.