New launches in residential segment decline by 55% for Q1

Developers are refraining from launching new projects as many states/cities are in the process of announcing new development plan

The number of new launches in residential real estate has come down by 55 per cent in the first quarter of 2015,  owing to subdued sales, according to a report.

Only 24,700 new residential units were launched in the January-March quarter this year compared to 55,500 units in the same quarter in 2014.

In the affordable segment, 1,700 units were launched in first quarter 2015 compared to 8,600 units in same quarter 2014, recording a decline of 80 per cent.

Similarly, for mid-end and luxury segment, 15,200 and 100 units were launched, respectively, this year against 40,600 and 200 units in 2014 first quarter with a decline of 63 per cent and 50 per cent, respectively.

The only silver lining was in the high-end segment, where launches  grew by 26 per cent at 7,700 units this year compared to 6,100 units in 2014. In the major cities,only Hyderabad saw increase in number of launches by 230 per cent (year-over-year) at 3,300 units while rest comprising Delhi-NCR, Mumbai, Pune,Bengaluru, Chennai,Kolkata among others recorded dip in launches.

“The decline in new launches have come on the back of less-than-expected sales in the residential sector, due to which developers are holding back on new launches and instead focusing on completing their existing projects,” the report by real estate consultancy firm Cushman & Wakefield said.

Shveta Jain, executive director, Transaction Services, Residential, Cushman & Wakefield said, “Cost of creating new projects has been on a steady increase as input costs have been rising. While the market sentiments are positive and the enquiries have increased, conversion of interest to sale is low.”

Also, many developers are taking time to restructure their debts and financial liabilities by ensuring that expensive debts are replaced with cheaper debt and attract private equity funds where possible. This is why, there is concentrated effort towards keeping debt exposure low by lowering the number of launches, except in high demand location where sale activities are high, she said.