Gurgaon is in a similar situation as Mumbai with volumes, which were falling till Apr 2010, reviving to some extent in May 2010. Prices in Gurgaon have now moved up 20% y-y on average and volumes are not likely to show any significant upward movement in the medium term, in our view. Unsold stock with developers at 29mn sqft has come down 44% from the peak, while inventory is down to just 6 months of sales which is the lowest since this data is available. We believe that prices could move up further in Gurgaon unless launches pick up pace and we expect this to start from Sep 2010.In the past 6 months, Noida and Greater Noida have recorded cumulative volumes in mn sqft, which are equal to cumulative volumes in the past two years. The number of units sold in the past 12 months (May 2009 to May 2010) is 4 times that of the units sold between Jul 2007 and May 2009. This large jump has not been led by any noticeable increase in employment activity in the region or any fall in pricing.
There is a lot of investor activity in this market, especially in projects on the Noida-Greater Noida expressway and the new Noida extension area. Large projects are being launched in Noida, leading to inventory levels moving up in absolute terms, although in terms of months of sales it is extremely low at 4 months. The actual inventory in the system though would be much higher because of the warehousing of these projects with the brokers. We believe that the model of sales to brokers is not a sustainable one and is likely to result in significantly large receivable issues for some of these developers going forward if the market takes a downturn.
No comments:
Post a Comment