MUMBAI: The ever optimistic realty brokerages are finally reading the writing on the wall. The USD 90-billion residential property industry was in tatters in 2017 with investors abandoning the market, new launches witnessing a 50 per cent fall, and sales plummeting 15 per cent across the top seven cities.
Anarock Property Consultants, one of the largest of residential brokerages in the country, released a report on Thursday showing Chennai’s residential realty market as the worst-hit in 2017. New launches fell 72 per cent from 15,700 units in 2016 to 4,400 units, while sales dropped 26 per cent from 17,800 units in 2016 to 13,200 units in 2017.
The slowdown seems to have hit southern cities the hardest with fresh launches dropping 64 per cent in Bengaluru and 57 per cent in Hyderabad. In comparison, new units launched in Delhi-NCR and the Mumbai Metropolitan Region dropped 45 per cent and 33 per cent, respectively.
Blaming demonetisation and the introduction of the Real Estate Regulatory Act for the slowdown, Anarock Consultants’ chairman Anuj Puri said: “A spate of policy reforms and structural changes literally crippled the sector.”
The disruptive reforms along with shortage of cash kept developers on the back foot in 2017.
“With only end-users left to drive the market and investors more or less evaporating completely, developers throttled back severely on new launches to allow the market more scope to absorb the already staggering unsold inventory,” Anarock Consultants’ chairman Anuj Puri said.
Although real estate data is often suspect, Anarock’s findings for calendar 2017 seem to be corroborated by independent residential property tracker Liases Foras. “Cities in south zone have shown a slowdown with sales in Chennai and Bangalore dropping by 30 per cent and 20 per cent, respectively, while Hyderabad just holding the grounds with a minuscule growth of 3 per cent,” Liases Foras’ annual report said.
An echo on the continuing depressed trend was voiced at a real estate conclave in Mumbai last Wednesday where Rajiv Sabharwal, CEO and MD of Tata Capital, said residential property as an investment class had virtually evaporated. He said the declining trend in sales and prices would continue into the future, too, for most cities except in a few inner-city micro-markets where there was a shortage of supply.
The silver lining to the gloom was that the restricted launches in 2017 resulted in a significant lowering of the unsold stock in the seven big cities.
Inventory declined by 10 per cent to 7.27 lakh in the last quarter of 2017 from over eight lakh units in the previous year. The stock clearance was also helped by a large amount of properties reaching near-completion stage. Interestingly, there was a clear shift in 2017 towards the ‘affordable’ housing segment with 44 per cent of unit launches (55,000 units) coming in with price tags under `40 lakh.
Builders shun risk
New launches in Chennai fell 72 per cent from 15,700 units in 2016 to 4,400 units, while sales dropped 26 per cent from 17,800 units in 2016 to 13,200 units in 2017
Anarock Consultants’ chairman Anuj Puri blamed demonetisation and the introduction of the Real Estate Regulatory Act for the slowdown
Instead of risks new launches, builders put their minds to executing under construction projects and to make them RERA-compliant