Investor demand pushes NCR realty prices up 25%

NCR is followed by Pune, which has seen 20.3 % jump while Bangalore saw an increase of 19.7 % in the period

 Continued demand of investors has led to a 24.6 % increase in property prices in the national capital region (NCR) in the first quarter of the current financial year. This rise is the highest among all property markets in the country, said a new report.

The NCR was followed by Pune, which saw a 20.3 % jump, while Bangalore saw an increase of 19.7 %. In contrast, Mumbai saw a five % jump in property prices in the last quarter, according to a report released by HDFC Securities on Wednesday.

"The NCR market saw a 25 % price rise driven by peripheral locations of Gurgaon and Noida Extension, but demand continued to be investor-driven in these markets," said Adidev Chttopadhay, an analyst with HDFC Securities.

Chattopadhyay said the muted price rise in the Mumbai metropolitan region needed to be taken with a pinch of salt as new launches in south/central Mumbai are priced 30-40 % discount to ready properties and peripheral areas were seeing more launches, where prices were more affordable.

He expects price rises across markets to remain muted at 5-10 % with select projects seeing price appreciation depending on project execution.

In terms of property sales, Bangalore has outperformed other markets with a 25 % jump in sales growth.

Property sales in Bangalore went up from 10.2 million sq ft in the March quarter of FY2013 to 12.8 million sq ft in first quarter of FY 2014. Property sales went down 12.2 % in the Mumbai Metropolitan Region and 13.2 % on a quarterly basis in the same period, HDFC securities said.

"The first quarter of FY14 saw flattish year-onyear and quarter-on-quarter growth in pan-India volumes at 62 million sq ft. However, the key takeaway is that although markets like Mumbai and Pune continue to experience volume slowdown, the Bengaluru market continues to deliver consistent quarterly sales volumes," Chattopadhyay said.