Launch of new residential units fall by 8% in Ahmedabad in Q1 of 2014

According to C&W, while the number of residential units being launched has gone down, the number of projects has gone up

Existing inventory and stable demand led to an eight per cent decline in number of residential units being launched in the first quarter of calendar year 2014 in Ahmedabad.

According to the latest report by real estate consulting firm Cushman & Wakefield, while the number of residential units being launched has gone down, the number of projects has gone up.

In Q1 2014, nearly 2,300 units were launched in Ahmedabad, registering a q-o-q decline of 8%. As per the report, although the unit launches declined, number of project launches more than doubled; indicating absence of any significantly large new project (which was noted in a peripheral location during the previous quarter).

With demand remaining stable in Ahmedabad, capital values were unchanged in Q1 2014 from the previous quarter. Moreover, a number of developers delayed new launches and focussed on clearing existing unsold inventory. Considering demand is higher for affordable units having ticket sizes of Rs 20-40 lakhs, transaction activity was relatively more in the peripheral locations of S.G. Highway and Bopal where such units are available mainly.

Further, during the quarter, new launches were concentrated in locations such as Makarba, Thaltej and Vasna in West Ahmedabad (33 per cent), followed by Vastral in the East (21 per cent) and Ranip in the North (19 per cent). The affordable segment accounted for 45 per cent of units launched in Q1 2014, while mid-end segment accounted for 55 per cent.

The decline in number of units being launched in Ahmedabad, however, is contrary to the trend otherwise visible across the top six cities including Delhi, Mumbai, Bangalore, Chennai, Hyderabad and Kolkata which saw a 43 per cent rise in new residential launches for Q1 of 2014.

"Developers have taken a conscious decision to launch projects in the first quarter of 2014 as they anticipate sales to improve this year in the second half foreseeing economic stability that will most likely prompt purchase decisions from end users. However, as concerns about the inflationary trends in the economy and an expected adverse impact of the El Nino remain, we believe that a cautious approach needs to be maintained for residential markets that are not primarily driven by end-user demand," said Sanjay Dutt, executive managing director of Cushman & Wakefield.

Meanwhile, in Q1 2014, rental values remained stable in Ahmedabad, Chennai, Hyderabad and Kolkata over previous quarter.

The rental values in a few high-end segment submarkets of Bengaluru, Mumbai and NCR registered a q-o-q decline in the range of 3-10 per cent, primarily due to large companies and individuals adopting a cautious approach in the wake of overall economic scenario and political environment in the country.