Residential Project launches across eight top cities, including Mumbai, Delhi-NCR, Bengaluru and Chennai, have declined by about 8 per cent between April 2016 and March 2017 compared to the same period a year ago, as the real estate industry grapples with the new Real Estate Regulatory Act (RERA), 2016, regulations, said a report by property consultants Cushman & Wakefield.
RERA was announced in March 2016. According to the report, at 25,800, the top 8 cities saw a 16 per cent dip in residential launches from the corresponding quarter. “A closer look at the trend indicates that launches have seen a steady quarter-on-quarter (Q-o-Q) decline for the past four quarters, corresponding with the announcement of the Real Estate Regulatory Act (RERA), 2016, in March last year and the demonetisation exercise in November 2016,” said the report.
The share of affordable segment in total launches improved to 30 per cent in April 2016 to March 2017 compared to 25 per cent in the same period in 2015-16. The launches in high-end and luxury segments have reduced to 11 per cent from 13 per cent in the same period. “Launches in the residential sector are expected to remain restricted over the next two-three quarters as developers will be making intrinsic changes to their business structure, operations and marketing strategies to comply with the RERA norms. Consumers would continue to remain restrained in the first half of the year. Further, with mild change in end user sentiments due to news of downsizing in the IT / ITeS segment, the sales velocity is expected to reduce,” said Anshul Jain, managing director, India, Cushman & Wakefield.
“A gradual improvement in buyer sentiment is expected towards the second half of 2017 as the impact of real estate reforms will begin to play out in the market. Capital values that are already reduced in selected locations within markets such as Delhi-NCR, Bengaluru and Mumbai, will continue to remain under pressure in the coming quarter as the markets readjust in the post RERA and GST regime,” Jain said.
Prices have already declined in cities like Delhi-NCR and Bengaluru and select markets in Mumbai during the first quarter of 2017. Developers are now offering several lucrative packages and incentives to close deals for genuine buyers. They have launched a higher number of subvention schemes like paying 5 per cent now, 95 per cent on delivery and some developers are even offering assurances of compensation/refund of difference, if prices decline in future.