Unsold inventory stands at 40% of launched units. Affordable and mid-segment housing categories have the highest absorption rates
Nearly 359,200 residential units are under construction in the NCR and about 50% of this supply will be ready for possession by the end of 2013.
Unsold inventory currently stands at 40% of launched units, says a report.
While residential property price appreciated between 10-30% in 2010 across major cities like Mumbai, NCR, Bangalore and Chennai, it declined by 10% in 2011.
New project launches, too, remained few and far between in the last year.
During 2010, 361,098 residential units were launched across the top seven cities of Mumbai, NCR, Pune, Kolkata, Bangalore, Chennai and Hyderabad. However, 2011 saw just 172,856 launches, a decline of 52% from the year before.
Moreover, of the total housing inventory pertaining to under-construction projects, 39% or 306,859 units are lying unsold. A substantial portion of this belongs to the NCR market, says a residential report by Knight Frank titled Economy and Realty @Glance.
Noida and Greater Noida constitute nearly 62% of the upcoming supply, most of which is in the affordable and mid-segment housing. A number of projects that were slated for completion in the second half of last year have been delayed due to a cash crunch faced by developers.
The drop in sales volume in the last quarter has also impacted the capital availability of developers.
Transaction volumes have gone down by 6% in the third quarter of 2011 compared to the second quarter.
Nearly 79% of the absorption has been in the affordable and mid-segment housing. Since most of these projects, in the range of R25004500 per sq ft are located in Noida and Greater Noida and new sectors of Gurgaon, these are the areas that have seen maximum absorption.
Even though the overall market has shown a negative growth in sales volume, sales in Noida have gone up by 13%.
Gurgaon's sales volume has also remained stable and not shown any negative growth.
Faridabad showed the biggest drop in sales of 38% in the third quarter of 2011 compared to the second quarter.
One of the biggest reasons for this is a lack of new project launches in Faridabad during the third quarter. Most of the projects under construction are delayed.
Based on absorption trends, unsold inventory in Greater Noida will be absorbed in six quarters, whereas Gurgaon and Noida will take approximately four quarters.
Unstable macro-economic conditions have affected consumer confidence and sentiments, which in turn have affected demand and led to limited increase in quarteron-quarter prices. However, the NCR has fared better than other metros and has not seen a drop in prices. The reason for this could be attributed to the uniqueness of the NCR market because investors play an important role in it. Even though end-users are cautious and waiting for interest rates to drop, investors have no inhibitions about investing in the market. This has kept prices stable.
Locations like Jor Bagh and Golf Links have shown a price increase of 15-20% compared to the third quarter of 2010 and command highest the capital values of R60,00085,000 per sq ft. Greater Kailash I and II have shown an appreciation of 25% compared to the third quarter in 2010, which can be attributed to an increase in circle rates of up to 250% and limited supply in these locations.
Gurgaon recorded an increase in the range of 25% compared to the third quarter of 2010, as a number of projects in locations like Golf Course Road and Sohna Road are nearing completion.
This has led to an increase in prices here
