Bangalore / Bengaluru
Absorption in Bengaluru remains healthy; average for the past one-year is more than 6msf per month.
New launches were the least in past one-year. 4msf of new launches compared to monthly average of 7msf for the past one-year.
Inventory level maintained at 80msf, high but not alarming. Inventory level in months of sales is at 15, within the range of 13-15 for past 12 months.
In nutshell, even after series of launches, high absorption has helped inventory level to keep in check. While absorption at ongoing rate and slower pace of new launches can keep the prices stable or help them to rise, a weak quarter in terms of absorption can push the inventory level higher and result in price correction.
Chennai
Absorption in Chennai has come down to 3msf from 5msf six months back; however, it is still much above the level of 1-1.5msf it witnessed two years ago.
Absorption in October was at a respectable level of 3msf, considering the city’s appetite.
New launches have reduced considerably due to lack of approvals from government authorities. Launches in the past three months together were as low as 5msf, which is lower than the average monthly launch a few months back.
The slower pace of new launches and reasonable absorption levels have reduced the inventory level to 32msf from 41msf six months back. Inventory in months of sales is also at a manageable level of 12.
In nutshell, the city is well placed compared to most other metros in the country. Slower pace of new launches combined with reasonable demand has
managed the property prices to stabilise at current levels and we don’t see possibilities of significant property price correction here.
Wednesday, December 28, 2011
Tuesday, December 27, 2011
Mumbai + Pune - Status of Residential Realty
In Mumbai, absorption has been declining since November 2010; absorption at 6msf is at its 25-month low.
New launches at 4.5msf less than half on YoY basis; however, launches can jump up sharply, if the approvals are back on track.
Even though new launches have reduced considerably, the reducing absorption level has kept inventory levels at 99msf. The inventory in months of sales is 16 doubled from 8 in September 2010. Though the inventory level has not increased since the past 20 months, considering large number of projects awaiting approvals, this figure can go up sharply. This is not a good sign for Mumbai property prices.
In nutshell inventory level is currently at a manageable level; however several projects nutshell, however, are awaiting approvals for launch. In case the approval process fastens, there will be a sudden rise in the inventory, which will push the developers to reduce the property prices. The savior is considerable improvement
in absorption, which seems unlikely at the current property price levels.
Pune
Absorption in Pune seems to follow absorption trend in Mumbai. Absorption in October 2011 is 3msf; at 23 months low.
New launches have declined considerably since beginning of the current calendar year. From the peak of 8msf in January, it has come down to as low as 2msf.
Inventory level declined from 61msf in January 2011 to 48msf in October 2011. This is not due to high demand but due of lack of new launches. The inventory in months of sales has started rising back. From the low of 11 in June, it has risen to 15.
In nutshell, Pune seems to follow Mumbai real estate market and we believe it is facing the same problem of possibility of sharp jump in new launches. The
market may witness property price correction unless developers time their launches in such a manner that not many properties hit the market at the same
time (this is unlikely scenario as scenario, most of the developers are keen to monetise their assets at the earliest).
New launches at 4.5msf less than half on YoY basis; however, launches can jump up sharply, if the approvals are back on track.
Even though new launches have reduced considerably, the reducing absorption level has kept inventory levels at 99msf. The inventory in months of sales is 16 doubled from 8 in September 2010. Though the inventory level has not increased since the past 20 months, considering large number of projects awaiting approvals, this figure can go up sharply. This is not a good sign for Mumbai property prices.
In nutshell inventory level is currently at a manageable level; however several projects nutshell, however, are awaiting approvals for launch. In case the approval process fastens, there will be a sudden rise in the inventory, which will push the developers to reduce the property prices. The savior is considerable improvement
in absorption, which seems unlikely at the current property price levels.
Pune
Absorption in Pune seems to follow absorption trend in Mumbai. Absorption in October 2011 is 3msf; at 23 months low.
New launches have declined considerably since beginning of the current calendar year. From the peak of 8msf in January, it has come down to as low as 2msf.
Inventory level declined from 61msf in January 2011 to 48msf in October 2011. This is not due to high demand but due of lack of new launches. The inventory in months of sales has started rising back. From the low of 11 in June, it has risen to 15.
In nutshell, Pune seems to follow Mumbai real estate market and we believe it is facing the same problem of possibility of sharp jump in new launches. The
market may witness property price correction unless developers time their launches in such a manner that not many properties hit the market at the same
time (this is unlikely scenario as scenario, most of the developers are keen to monetise their assets at the earliest).
Monday, December 26, 2011
Delhi NCR - Real State of Realty
As we end the year 2011, here is the Real State of Real Estate in India.
Absorption in NCR at 10msf has reduced considerably from 15-20msf witnessed six months back. However, it is significantly higher than the lows of 3-5msf attained in 2008-09.
The dearth of investor demand has pushed new launches to as low as 8msf, compared to 20-25msf a year back. We do not see any possibilities of this demand coming back in the next six months primarily owing to high property prices and the uncertain economic scenario which will in turn keep a check on NCR months, new launches.
The inventory level at 132msf is higher than other cities; however, it has come down from the peak of 150msf in 2010, due to the slower pace of newer launches. Inventory in months of sales at 12 is higher than the two years average of 9, which is a concern.
In nutshell, inventory level at 132msf is high and in months of sales. It is at 12, higher than the two years average of 9 months. However, a micro analysis suggests that the Gurgaon and Noida markets are well placed with just seven months of sales each. New Delhi has an inventory as low as 2.3msf and being land scarce region, doesn’t have pressure on price. Greater Noida has seen new launches at an aggressive pace, but without adequate absorption. We believe Greater Noida is set to witness price correction, which is unlikely for Gurgaon, Noida and New Delhi.
Absorption in NCR at 10msf has reduced considerably from 15-20msf witnessed six months back. However, it is significantly higher than the lows of 3-5msf attained in 2008-09.
The dearth of investor demand has pushed new launches to as low as 8msf, compared to 20-25msf a year back. We do not see any possibilities of this demand coming back in the next six months primarily owing to high property prices and the uncertain economic scenario which will in turn keep a check on NCR months, new launches.
The inventory level at 132msf is higher than other cities; however, it has come down from the peak of 150msf in 2010, due to the slower pace of newer launches. Inventory in months of sales at 12 is higher than the two years average of 9, which is a concern.
In nutshell, inventory level at 132msf is high and in months of sales. It is at 12, higher than the two years average of 9 months. However, a micro analysis suggests that the Gurgaon and Noida markets are well placed with just seven months of sales each. New Delhi has an inventory as low as 2.3msf and being land scarce region, doesn’t have pressure on price. Greater Noida has seen new launches at an aggressive pace, but without adequate absorption. We believe Greater Noida is set to witness price correction, which is unlikely for Gurgaon, Noida and New Delhi.
Sunday, December 18, 2011
Lodha World One - India's Tallest Residential Tower
We visited the Lodha World One site in Lower Parel (Mumbai), where India's proposed tallest residential building is under construction. We found a lot of activity at the site and currently basement construction work is underway.
The contract is executed by Arabian Construction Company (ACC)- Simplex Infrastructures consortium, with a duration of 48 months from February 2011.
Lodha World One: The total area of 1.3 mn sq ft comprises 290 units (80 units of 7,000 sq ft and around 15 units of 12,500 sq ft, balance 3 and 4-BHK). Lodha expects expects the cost of construction to be in range of Rs 9,000 per sq ft. Layout plan approved/Government car park (CC in place), permission for 80 storeys in place. Current price is Rs32,000-35,000 per sq ft; Launch price of Rs21,800 per sq ft. 60-65% apartments have sold, 40-45% of these are the smaller-sized apartments.
Lodha World Crest:Total area of 0.7 mn sq ft comprises 214 units (3 and 4-BHK), with 60 units sold. The construction contract is yet to be awarded. The current price is Rs24,000-25,000 per sq ft.
The contract is executed by Arabian Construction Company (ACC)- Simplex Infrastructures consortium, with a duration of 48 months from February 2011.
Lodha World One: The total area of 1.3 mn sq ft comprises 290 units (80 units of 7,000 sq ft and around 15 units of 12,500 sq ft, balance 3 and 4-BHK). Lodha expects expects the cost of construction to be in range of Rs 9,000 per sq ft. Layout plan approved/Government car park (CC in place), permission for 80 storeys in place. Current price is Rs32,000-35,000 per sq ft; Launch price of Rs21,800 per sq ft. 60-65% apartments have sold, 40-45% of these are the smaller-sized apartments.
Lodha World Crest:Total area of 0.7 mn sq ft comprises 214 units (3 and 4-BHK), with 60 units sold. The construction contract is yet to be awarded. The current price is Rs24,000-25,000 per sq ft.
Tuesday, December 06, 2011
Residential Sales Hold in Bangalore - Gurgaon slowing down - Mumbai Weak
Residential apartment sales data for the festive season (i.e. Oct/Nov month) is not available as yet, channel checks suggest that festive sales haven’t been encouraging (as compared to last two years).
Bangalore / Chennai continues to witness healthy absorption trends. Launch activity has come down in Nov after witnessing a meaningful pick in Oct (given festive month). In terms of markets, absorption trends remain sluggish in Mumbai; while volumes in Gurgaon are also coming off at the margin. Initial signs of price discounting have started to happen in Mumbai (subvention schemes, waivers etc).
In terms of pricing, Mumbai has seen price discounting primarily in the form of discounts or waivers, while quoted prices remain stable. EMI subvention schemes (80:20 schemes) have gained prominence in NCR/Mumbai. Number of reputed developers in Mumbai have announced these schemes over the past month for under construction projects. However quoted prices have not come down meaningfully as yet. Prices in Gurgaon remain largely stable; while Bangalore / Chennai are witnessing 5-10% appreciation despite high launch activity.
Mortgage rates seem to have peaked out (at 11.5% levels) with few HFCs/banks offering 25bps discount to floating home loan rates.
Bangalore / Chennai continues to witness healthy absorption trends. Launch activity has come down in Nov after witnessing a meaningful pick in Oct (given festive month). In terms of markets, absorption trends remain sluggish in Mumbai; while volumes in Gurgaon are also coming off at the margin. Initial signs of price discounting have started to happen in Mumbai (subvention schemes, waivers etc).
In terms of pricing, Mumbai has seen price discounting primarily in the form of discounts or waivers, while quoted prices remain stable. EMI subvention schemes (80:20 schemes) have gained prominence in NCR/Mumbai. Number of reputed developers in Mumbai have announced these schemes over the past month for under construction projects. However quoted prices have not come down meaningfully as yet. Prices in Gurgaon remain largely stable; while Bangalore / Chennai are witnessing 5-10% appreciation despite high launch activity.
Mortgage rates seem to have peaked out (at 11.5% levels) with few HFCs/banks offering 25bps discount to floating home loan rates.
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