Home launches in NCR dip 68% in H1, 2015: Knight Frank India

Housing launches in the National Capital Region (NCR) in the year’s first half were 68 per cent below the same period last year, at 11,360 units from the earlier 14,250 units. However, compared to the second half of 2014, it was 18 per cent more.

There was also no new launch in the premium category, priced above Rs 3 crore.

“This indicates that with weak demand, developers are looking to exhaust the current inventory instead of blocking capital in high ticket-size projects,” says a report from real estate consultancy Knight Frank India.

Demand for properties prices above Rs 3 crore each have dropped from 918 units in the first half of 2013 to 215 in the first half of 2015, indicative of overall market sentiment, the report said.

Home projects, helped by the Haryana government’s affordable housing policy of 2013, contributed significantly to the new launches for the first half, at 43 per cent. “NCR is now an end user-driven market. Developers have restricted new launches, while buyers are carefully selecting clean projects,” said Mudassir Zaidi, national director at Knight Frank.

The report says the NCR house market is in a state of correction, with stakeholders staring at piled inventory and bottomed-out sales velocity.

“Investors formed a major chunk of the market appetite in the NCR till about two years ago. The stagnation in prices and slowdown in the real estate investment conversion cycle have filtered out short-term speculators completely, while long-term investors are looking for an exit,” the report added.  The majority of under-construction inventory is in Greater Noida, Noida and Gurgaon. A significant 30 per cent of the under-construction inventory was actually launched in 2009-10. Current NCR inventory is 189,768 units, highest across the country. At the current pace, this will take five years to be fully absorbed.

The market became overly bullish, with a flurry of new project launches, in 2010-12. However, demand did not keep pace with the supply, which led to the NCR housing market bubble bursting.