Greater Noida and Faridabad have left Gurgaon way behind in growth when it comes to absorption or sale of residential units and project launches.
A survey of the national capital region (NCR) during the first quarter of the year shows absorption in Greater Noida shot up to 12,342 units, recording a growth of around 519 per cent compared with the same time last year. The launches also rose 180.8 per cent in the first quarter in Greater Noida to 7,785 units. In contrast, Gurgaon, an investor-driven market, saw a 12.8 per cent decline in absorption, touching 3,675 units in the first quarter, and a 38.9 per cent dip in launches at 5,416 units, according to data by real estate research firm PropEquity.
In Faridabad, another NCR area close to Delhi, the absorption increased by 91.2 per cent and launches by over 302 per cent during the first quarter this year.
On the whole, the absorption or sale of units in the NCR region in the first quarter of 2013 increased by 45 per cent compared to the same period last year. But, the NCR launches dropped 24 per cent in the same period. Experts have reasoned that developers are focusing on clearing their inventory, which is still very high.
Gaurav Pandey, Senior Vice President and Head Research & Consulting, PropEquity said, "The reason for the NCR region depicting a healthy absorption number in the first quarter is mainly due to demand picking up for affordable options available in Greater Noida and Faridabad."
In the current scenario, logically, prices in Gurgaon should be muted, pointed out experts. As for the numbers, developers are launching projects rationally, which can be absorbed well. Also, absorption/sales decline is much less compared to new launches in Gurgaon, which is a healthy trend.
Pandey attributed the trend in Gurgaon to "bad investor sentiment". Everybody is watching for some positive economic trigger that will have a cascading effect on the property market for sustained growth, he said. Growth in Greater Noida and Faridabad, on the back of affordable options, may result in 10-12 per cent increase in prices there, according to market buzz.
After NCR, Bangalore recorded maximum absorption of units at over 41 per cent for the first quarter this year, the PropEquity study shows. The number of new launches saw an upward movement by 58.15 per cent.
The high absorption level in NCR assumes importance, with the inventory level doubling in the last three years in the region. Inventory pile up in NCR had reached 31 months at the end of March 2013 against 15 months at the end of March 2010, according to data by another real estate consulting firm, Liases Foras.
In Bangalore, however, the inventory level had come down to 18 at the end of March 2013 against 22 at the end of March 2010.
Inventory denotes the number of months required to clear the stock at the existing absorption rate. An efficient market maintains an inventory level of eight-10 months.
Bangalore has continued to give a good performance with both absorption rate and new launches going up substantially, he said.
Most developers in NCR including Unitech, DLF, Supertech, Parsvnath have claimed that they are focused on clearing the backlog this year.
Even Supertech chairman and managing director R K Arora said it would deliver an area of about 20 million sq ft this year, out of 70 million sq ft to be delivered in the next five years.
To clear their vast inventory, developers have started repackaging their units, by giving freebies, discounts and various other schemes to attract buyers.
In Mumbai, the project launches increased significantly by 53.4 per cent while the absorption was at a slow place at 13.21 per cent during the first quarter. In Pune and Chennai, both absorption and new launches came down during the first quarter this year. (see table for details)
Talking about the realty market, Samir Jasuja, Founder and CEO, PropEquity said, "The absorption rates in Q1 2013 are still sub-optimal in most cities and are dependent on the overall economic environment."