New residential launches drop 50% across top 7 cities in 2017; Chennai records highest dip in sales

New Delhi: Indian realty sector saw fewer launches, subdued sales and muted property prices in the year 2017. With an annual decline of almost 50 percent in new launches and 15 percent decline in sales across top seven cities in India, the sector was effectively shattered in 2017, said an ANAROCK Property Consultants report.

The top seven cities recorded new unit launches of around 1.26 lakh in 2017 as opposed to 2.50 lakh in 2016. MMR (Mumbai Metropolitan Region) contributed the maximum fresh apartments supply with 38 percent (48,400 units), NCR's contribution was 18 percent with 22,200 units, Bengaluru's contribution was 13 percent with 16,000 units, Pune's contribution was 11 percent with 13,800 units.

Chennai's residential real estate market was the worst-affected in 2017, with an annual decline in new launches of around 72 percent from 15,700 units in 2016 to 4,400 units in 2017.

Pune, Bengaluru and Hyderabad recorded an annual decline of 67 percent, 64 percent and 57 percent respectively in new launch units. NCR and MMR recorded a drop of 45 percent and 33 percent, respectively.

A series of highly disruptive reforms, coupled with mounting unsold inventory and stringent RERA norms, kept developers on the back foot in 2017, the report said.

Restricted new launches in 2017 resulted in a significant reduction of unsold inventory levels across the top seven cities. Overall unsold inventory decreased by 10 percent from 8.04 lakh units in Q4 2016 to 7.27 lakh units by Q4 2017.

Chennai recorded the highest dip in sales at 26 percent - from 17,800 units in 2016 to 13,200 units in 2017 while Bengaluru saw the lowest dip in sales at 2 percent - from 43,300 units in 2016 to 42,300 units in 2017; MMR sales dipped by 24 percent - from 69,600 units in 2016 to 52,600 units in 2017; Kolkata's sales dipped by 23 percent - from 16,800 units in 2016 to 12,900 units in 2017; NCR's sales dipped by 22 percent - from 47,900 units in 2016 to 37,700 units in 2017; Pune's sales dipped by 6 percent - from 31,200 units in 2016 to 29,400 units in 2017.

Prices across the top seven cities remained largely range-bound in 2017, primarily due to the presence of significant unsold stock and cautious buyer sentiments. In 2017, the market clearly made a shift towards the affordable housing segment, with 44 percent of unit launches (55,000 units) coming in with price tags under Rs 40 lakh. This is a major shift in the Indian real estate sector and developers are now visibly aligning their supply with the budget ranges dictated by demand, so as to avoid any mismatch, the report said.

Anuj Puri, Chairman, ANAROCK Property Consultants said, "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."