Chennai witnesses more launches in housing projects in Q3

Study shows affordable housing projects dropped by 50% in top 8 cities

The July-September period of the calendar year 2014 witnessed launch of 166 new housing projects across top eight cities in the country, with Chennai recording the highest, at 45 projects, while Ahmedabad registered the lowest with five projects, according to global real estate consultancy Cushman & Wakefield.

Its latest report on residential markets of India, it showed there was a drop in total residential units launched in the third quarter of 2014 (Jul–Sept) by around 21 per cent, when compared with the same period last year. The study covering top eight cities revealed new launches in affordable housing segment dropped by a sharp over 50 per cent during the period under review as against the same period  last year.

While the demand remains the highest in this segment, developers refrained much due to larger scale of construction and management, rising input cost for development that made it tougher for them to provide affordable housing within the city limits or even in the peripheral region.  

The mid-segment, which is traditionally the highest proportion of new launches, saw a decline of 14 per cent during the period compared with the last year, the high end segment too witnessed a 10 per cent drop.

Shveta Jain, executive director — residential services, Cushman & Wakefield, said “supply outstripped demand in most of these cities due to weak market sentiment and slower growth rate in sales, due to which new launches remained checked. There is a conscious effort by developers to keep the number of units low and are thereby making smaller-sized projects to help them deliver on time and meet the expectations of the purchasers. This, in turn, has been instrumental in keeping the prices stable allowing the market to remain positive.”

Jain further said, “The added disadvantage that many developers are facing is the dearth of developable land within the city limits. Factors such as land pricing, development cost, cost of construction and material etc. have also seen some escalation in the last few years, which have made developers choose their projects carefully.”

Beating the average national trend, the locations of Kolkata saw a significant rise in the new launches in the quarter over same time last year. With 2,300 unit launches, market activity improved by around 28 per cent from the previous year.

The improvement was primarily due to developers’ increased focus on mid segment offerings (85 per cent of total unit launches in Q3 2014 compared to 55 per cent in Q3 2013), which cater to a larger consumer base, said the firm.

Segment wise residential launches (y-oy)
Segment	Q3 2014 (No. of Units)	Q3 2013 (No. of Units)	y-o-y% change
Affordable	4,700	9,800	-52%
Mid	21,400	25,000	-14%
High-end	8,100	9,000	-10%
Luxury	400	Nil	NA
Total	34,600	43,800	-21%
Source: Cushman & Wakefield

Pune also experienced a growth in total units launched of about 18 per cent in Q3 2014 over the same period last year due to reasons of festive season demand. Many projects previously in the pre-launch stages were added to the market ahead of the festive season. The increase was primarily due to an anticipated improvement in demand amidst higher enquiries, signaling an end to wait-and-watch approach adopted by buyers for the past few quarters.

With approximately 800 units launched in the third quarter of 2014, Ahmedabad recorded a decrease of nearly 62 per cent in total new units launched in 3Q 2014 as against the same time last year primarily due to the fact that developers preferred to defer their new project launches in the wake of existing high levels of unsold inventory.

Delhi-National Capital Region (NCR) also followed suit with a decline of 54 per cent with new residential launches of approximately 4,500 units in 3Q2014 as compared to same time last year. Unit launches decreased as developers focused on completing existing projects (in the wake of significant unsold inventory) and delayed new launches awaiting an increase in demand.

City wise residential launches (y-o-y)
City	Q3 2014 (No. of units)	Q3 2013 (No. of units)	y-o-y change
Ahmedabad	800	2,100	-62%
Bengaluru	9,700	13,200	-27%
Chennai	4,400	4,100	7%
Delhi-NCR	4,500	9,700	-54%
Hyderabad	2,000	1,900	5%
Kolkata	2,300	1,800	28%
Mumbai	6,400	7,200	-11%
Pune	4,500	3,800	18%
Total	34,600	43,800	-21%
Source: Cushman & Wakefield