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Real estate launches drop 30% in 2012: Knight Frank

Declining bank credit, high mortgage, economic slowdown, inflation attributed to fall in absorbtion

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New launches in 2012 declined by 30% in 2012, versus a 7% decline seen in 2011. Slowdown in to real estate amid was attributed to the stagnancy in new ventures, a report said.

Plagued by high property prices, relatively higher mortgage rates, weak business sentiments and a bleak employment scenario, realty players were cautious of launching projects as the gap between the launch and the absorption numbers reduced to 32,000 units in 2012 compared to 82,000 and 94,000 units in 2010 and 2011 respectively, reflecting weak demand.

Residential sales in the top 6 cities fell by 16% in 2012, versus 14% in 2011. Markets like NCR and Mumbai accounted for almost 60% of the total absorption among the top 6 cities, where NCR saw the highest absorption at 37%, and Mumbai 23%.  It was followed by Bengaluru at 13%, Pune at 11%, Chennai 9% and Hyderabad 7%.

Banks’ credit exposure to developers has fallen from its peak growth rate of 23.21% in June 2011 to 3.88% in September 2012.

The report said that the NCR residential market will stabilize in 2013 as new controlled supply in the region will keep a check on the quantum of unsold inventory.

Whereas, price growth in Mumbai will be muted on account of the unsold inventory and increasing share of peripheral markets, it said.

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