Residential Market Remains Stagnant Quarterly Update IndiaResidentialMarket Overview Report for 3Q 2013Released

Kolkata December 18, 2013: Pan-India Highlights :-Overall markets showed stagnant construction activity and lesser new residential project launches during the third quarter of 2013 as compared previous year same quarter. Pressures of increasing unsold inventory and a liquidity crunch resulted in fewer project launches.  Due to liquidity issues, delay in construction activity and slow absorption rates, project completions registered a rather weak trend this quarter following the previous one, barring a few minor completions noted in Kolkata and Gurgaon.

Due to stagnancy in demand, the capital values in most of cities remained stable except in few precincts capital prices continued to push upwards marking 1-3% increase in Western Mumbai, 2-9% in Chennai and 3-10% increase in Bengalurudue to increased demand and improved infrastructure.  In NCR, there is a downward pressure on capital values as the asking price for prime residential properties has come down by approximately 5 – 10%. However, not many deals have been concluded in the market.

Mumbai, Gurgaon and Noida registered stable rental rates throughout the third quarter of 2013. Other cities experienced increase in rental rates such as Bengaluru with 6-7%, Kolkata with 4-9% and Chennai with 2-9%.Delhi on the other hand, registered a dip of rental rates between 5-14% mainly due to Embassies and MNCs maintaining their current costs. Going forward End Users and buyers will continue to be cautious due to the current uncertain economic and political conditions; coupled with high residential prices. Capital values across most micro-markets in almost all the major cities will remain stable, even though transaction volume will remain constraint. Importantly, the current oversupply in the market will get mitigated in the coming quarters, as very limited new projects are being launched.

City Market Prognosis

Mumbai’s residential market is foreseen to remain stable marked by low liquidity and high prices. Absorption in the luxury segment will remain under pressure. The pre-launches in the mid and low end segment will continue to have traction at the introductory prices. The recent hike in the floor space index of 3 for the redevelopment of cessed buildings is expected to boost the city’s redevelopment projects to some extent and improve the overall supply situation over the long term. Overall capital values in the primary and secondary sales markets are expected to be under pressure in the short to medium term.

NCR region is thought to experience a more cautious investor approach due to upcoming political changes and economic slump, thus anticipating a rather stable demand with further plunging rental and capital values and late completions from 2009-2010 launches.

Pune, Bengaluru and Chennai continue to show a moderate demand of residential units. The IT/ITeS sector will remain the primary demand generator for mid-range residential properties.Considering the upright demand from end users and investors, capital and rental values are expected to increase by 2 – 5% in the near term. Demand in the Kolkatamarket is primarily driven by the mid- segment;due to this, capital values in the middle andaffordable segments are likely to see marginalappreciation. A number of developers areplanning to develop premium properties inprime locations of south central Kolkata.CCI Newsire