Our analysts recently visited the National Capital Region (NCR). This region has witnessed a drastic change in landscape due to real estate development over the past five years. The major players in the NCR include DLF, Unitech, Parsvnath, Omaxe and Ansals, among the listed ones, and host of other players such as Uppals, Vatika, JMD etc.
Our survey of the major micro markets within NCR shows that demand in the residential segment has slowed down, mainly because of a decrease in the investor demand and lack of affordability in Gurgaon. Despite this, the supply continues to ramp up. In the IT/ITES segment, significant supply has been the cause of correction in some micro markets. In the retail segment, our major apprehension is that the tenants are finding it difficult to reach break-even, though the supply continues to witness a growth trend.
Demand for residential segment has slowed down considerably (~20-25%) in the past three months. Leading brokers and property consultants revealed that there has been no announcement of any new launches from developers and that the developers are holding on to their stocks of residential units. Developers have formed informal cartels and are holding up their supplies to maintain the prices because their maybe a sharp correction in the absence of demand. The end-user however has adopted a wait-and-watch approach, anticipating a correction in apartment prices and home loan rates which makes the EMI simply unaffordable.
Some of the properties in Gurgaon under development with no rationale for pricing include, Parsvnath Exotica Rs 6,900 / sft, Unitech Escape Rs 5,200 & onwards and Unitech Fresco Rs 5,200 & onwards.
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