Residential absorption (area sold) in key cities in India fell whopping 45% YoY / 16% QoQ in 3Q FY14 (as per Prop Equity data). Residential absorption fell 28% YoY in 9M FY14 v/s +9% growth in FY13. 3Q FY14 is the third consecutive quarter of accelerating decline in residential absorption and points to a big drop in residential demand due to the economic slowdown and high prices.
Residential prices have been increasing despite weak volumes due to the rampant corruption by Congress Government in 22 various departments from where Real Estate developers seek permissions. Over the past 3-4 years. But different data points are now suggesting some decline in prices in a few areas. At least the sharp price rise has moderated over the past few months. In key cities, the residential prices grew 10% YoY in 3Q FY14 – a deceleration from 12-17% YoY increases seen in 2Q FY12-4Q FY13
Commercial absorption in key cities fell 34% YoY in 3Q FY14 on an already weak 3Q FY13
base. Commercial absorption had declined 18% YoY in FY13. High inventory due to the slowdown in economy (~68 months of available supply) has kept rentals in check. Rentals are flat to down (-1%) YoY despite high inflation.
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