SUPPLY, DEMAND INCH UP

Created on 22.01.2019 21:27:43
SUPPLY, DEMAND INCH UP

On the back of attractive prices in the residential real estate, the sales figures in 2018 crossed the 40,000 mark after four years in the NCR Delhi. Knight Franks says in a report that the current market analysis shows the sector witnessing green shoots of recovery on both the supply and demand side.

Another consultancy firm, JLL, also pointed out that given the steady price scenario, persistent growth in sales with new launches under control and proper implementation of policy changes will have a significant positive bearing in revitalizing the residential market.

The Knight Frank report said that the average price of housing units in the Delhi NCR is presently prevailing at the level of that in 2014.

Another encouraging factor for rise in the future demand for residential real estate emanates from the rising demand of office space in the region. During July-December of 2018, the NCR market absorbed 4 million sq ft of office space, registering a growth of 21%, compared to the same period in 2017.

Pent-up supply of another 4 million sq ft also entered the market in the second half of 2018, which marks a growth of 74% compared to the same period in 2017. Rentals have also started firming up in the region, by 11% in 2018, the Knight Frank report says.

Year 2018 proved to be good for the Noida market, apart from Gurgaon, with Noida recording nearly 2.1 million sq ft of leasing activity in 2018, registering a growth of 26% over 2017. Gurgaon registered strong growth, at 26% in 2018, with total leasing of 4.8 million sq ft office space.

Demand for office space remained strong, consecutively, for the last three years. Experts say that such a strong growth is bound to affect demand for residential real estate positively.

In the real estate markets, the Knight Frank report shows, Year 2018 brought about a welcome change. The report says that the enforcement of the Real Estate (Regulation and Development) Act, 2016, in the first half of 2016 and the Goods and Services Tax Act in July 2017, adversely affected the already slow market and put business on the back foot.

“ However, current market analysis shows that the sector is slowly adjusting to the policy restructuring and green shoots of recovery can be seen on both the supply and demand side,” the report says.

On the demand side, sales started to look up in 2018 in the Delhi NCR. On a yearly comparison, nearly 40,646 units were sold in the NCR in 2018, registering a growth of 8% over the sales numbers of 2017. The second half of 2018 registered a 10% growth over the same period in 2017.

Greater Noida registered highest sale volume, with 20,600 units in 2018, clocking a growth of 51% with respect to the same period last year. The large sales volume in Greater Noida was mainly due to the availability of housing units in the price range between Rs 30 lakh and Rs 50 lakh.

However, sales in Gurgaon declined by 34%, to 6,850 units only. The report said that even though there are increased enquires, infrastructure delays (Dwarka Expressway is still not ready) are holding back interested buyers who are majorly end users. Another factor contributing to this sluggish demand is that the fresh inventory with builders is in direct competition with the inventory lying with investors who are ready to take a hit and exit the property.

The Knight Frank report shows new launches in the NCR registered a 35% growth in the number of units launched in 2018, to 15,819 units launched in 2018, compared to 11,726 units in 2017.

In Greater Noida, only 4,144 units were launched in 2018. Though sales have slowed down in Gurgaon, new launches saw a spurt with 7,800 launches.

The report says that the average prices have gone up by 2% in the region. As the market has found its bottom, experts say end users will take the plunge to buy houses.

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