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Ahmedabad took the highest beating in terms of decline in new residential unit launches in the third quarter of calendar year 2014, says global real estate consultancy Cushman & Wakefield. As against 2100 units being launched during July-September period of calendar year 2013, Ahmedabad saw a whopping 62 per cent decline at just 800 units being launched for the said period this year.
In its latest research on the residential markets of India, the firm has reported a drop of overall 21 per cent across top eight cities including Mumbai, Chennai, Kolkata and Bengaluru for Q3 2014 as compared to same time last year. The third quarter of 2014 saw launch of 166 new housing projects across the top eight cities with Chennai recording the highest 45 projects while Ahmedabad recorded the lowest number of new launches of 5 projects in the quarter.
Decline in Ahmedabad is being attributed to the fact that developers preferred to defer their new project launches in the wake of existing high levels of unsold inventory, said Shveta Jain, Executive Director, Residential Services, India at Cushman & Wakefield.
Segment-wise, the sharpest decline in launches was recorded in the affordable segment which declined by 52 per cent in Q3 2014 as against Q3 2013. Mid segment, which is traditionally the highest proportion of new launches, saw a decline of 14 per cent in the time frame year-on-year (Y-o-Y) while high end segment declined by only 10 per cent.
While the demand remains the highest in affordable segment, the segment is not preferred by developers due to the larger scale of construction and management apart from the fact that input cost for development have started to inch upwards making it tougher for developers in the key cities of India to provide affordable housing within the city limits or even in the peripheral region.
"Supply outstrips demand in most of these cities due to weak market sentiments and slower growth rate in sales due to which new launches have remained checked. There is a conscious effort by developers to keep the number units low 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 in the market allowing the market to remain positive," said Jain.
Also, dearth of developable land within reasonable city limits is also being seen as an added disadvantage by developers. "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," Jain added.
