Launches of new homes in India decline by 60%; Mumbai worst hit, here’s why

The data was carried of nine cities namely Ahmedabad, Bengaluru, Chennai, Gurgaon (includes Bhiwadi, Dharuhera and Sohna), Hyderabad, Kolkata, Mumbai (includes Navi Mumbai and Thane), Noida (includes Greater Noida and Yamuna Expressway) and Pune.

Representational Image: Photo: Pixabay

A list of factors have continued to hamper true potential growth of real estate sector in India, which is why, a recent report mentions that despite home sales grew by 33% in first three months of 2018, the supply of new homes declined to a massive 60% during those period. Interestingly the report also pointed out that home sales have slowed down. Let’s have a look how real estate sector performed in January - March 2018 months.

According to PropTiger Datalabs, home sales in India grew by 33% on year-on-year basis in the first quarter of calendar year 2018.

The data was carried of nine cities namely Ahmedabad, Bengaluru, Chennai, Gurgaon (includes Bhiwadi, Dharuhera and Sohna), Hyderabad, Kolkata, Mumbai (includes Navi Mumbai and Thane), Noida (includes Greater Noida and Yamuna Expressway) and Pune.

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Sales in affordable housing hub of the national capital region Noida saw the highest increase at 69%. Not lagging far behind was its peer Gurgaon, where home sales increased 62% in the March quarter when compared to the same quarter last year. Pune (56%), Bengaluru (46%) and Mumbai (40%) also witnessed impressive hiked in their home sales number during the quarter.

In Hyderabad, however, sales declined 29% y-o-y. In Ahmedabad, on the other hand, no change was witnessed in sales number.

The government’s demonetisation move came as bolt from the blue for real estate, and while the sector was busy recovering it’s shocks, in months to followed the launch of the Real Estate (Regulation & Development) Act, 2016, in May and the Goods and Services Tax in July 2017 generated further stress with home sales taking most hit. Going ahead, the new year came as a better times, as per the report, but yet did not reach it’s maximum potential.

PropTiger mentions that, strict provisions laid under the real estate law makes it difficult for developers with a poor track record to launch projects. Developers who fail to meet project deadlines would also face harsh penalties. That and the liquidity crunch also significantly impacted new project launches in the city.

In comparison with March quarter last year, the nine cities saw decline of 60% in new project launches. Launches stood at just 27,800 units this quarter compared to last year where new projects were launched at 69,489 units.

India’s financial capital Mumbai had the worst quarter, where launches dropped 81% compared to Q1 CY17. Mumbai including Navi Mumbai and Thane region witnessed launch of just 5,296 units from the total unit launched. Not only this, even Pune region saw drop of 66% to 3,370 units this quarter from 9,936 units of corresponding quarter of previous year.

Going ahead, the data revealed that, Noida region - including Greater Noida and Yamuna Expressway registered decline of 66% in launches at 1,553 units during January-March 2018 compared with 4,531 units a year ago same period.

Next in line to see massive decline in new launches was Hyderabad which saw drop of 57% 3,419 units this quarter from 7,920 units (January - March 2017).

This was followed by Gurgaon region including Bhiwadi, Dharuhera and Sohna markets where launches slumped by 52% to 2,666 units from 5,501 units. While Bengaluru saw plunge of 50% in launches to 5,676 units.

Chennai and Kolkata also saw drop in their new launches by 24% and 8% with just 2,266 units and 3,554 units respectively.

Ahmedabad was the only city which recorded no new supply between January - March 2018.

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