Real estate in India’s richest city is unsold
Real estate in India’s richest city is unsoldin New projects Wed Jan 16, 2013 7:58 pm
by David Luke • 1 Post
India has been hailed as one of the more interesting emerging property markets in Asia but figures reveal that in one of its major cities, Mumbai, a substantial amount of real estate is unsold.
Up to 60% of luxury apartments, both developed and under construction, remain unsold in Mumbai and experts say it is due to surging prices and regulatory uncertainty.
The Confederation of Real Estate Developers Association of India (CREDAI) has called for urgent reforms, saying there is too much ‘black money’ in the system and corruption.
But it says the government is blocking reforms that the industry actually wants. Reform is needed across the board including property tax, banking and lending, land sales and administration.
The result is that buyers are dwindling. Of the 3,300 luxury apartments being developed in Mumbai it is estimated that between 55 and 60% are yet to be sold. These include flagship developments such as The Imperial at Tardeo in south Mumbai, Orchid Crown at Prabhadevi, and World One at Lower Parel.
The Mumbai market saw about 100 luxury apartments sold in 2011/12 tax year compared with about 400 sold in 2007/08 , the peak of the property market. But an oversupply due to developers rushing to cash in in what was perceived as a property boom is now blighting the market.
‘There’s no doubt that sales in this segment are going slow. Developers are also, therefore, going slow with the construction of these projects. Some developers who have ready apartments are waiting for a better price, but this is more in hope than anything else,’ said Pranay Vakil, chairman of Knight Frank India.
Lalit Kumar Jain, president of CREDAI, has also suggested that special housing zones should be set up. ‘We need clarity on land policy as restricted land use and continued pressure on land availability is pushing up costs for developers,’ he explained.
‘There has been a lot of talk and no action. We hate the system that labels us as crooks but we come up against various bottlenecks at governmental level. The government needs to take the lead on this,’ he added.
Source : Property Wire
RE: Real estate in India’s richest city is unsoldin New projects Sun Feb 03, 2013 11:57 pm
Top eight Indian cities need 2.1 million new homes by 2016
India’s major cities will need another 2.1 million housing units in the next five year to meet demand, according to a new report from real estate consultants.
More than 50% of this need will be for properties in the mid-income segment, says the report from Cushman & Wakefield.
Around 18% of this demand is likely to be concentrated in the top eight cities including Mumbai, National Capital Region, Bangalore, Chennai, Pune and Kolkata.
Also across the whole of India some 11.8 million units will be needed by 2016, the report also predicts. The figures are based on past trends for population and household growth and the income classification for households.
Of the total additional demand in the top eight cities, demand for mid-segment is estimated to be highest at approximately 59% or 1.3 million units, followed by demand in the high end market for 451,000 units. The low end segment is expected to demand for 362,000 units.
‘The demand in the leading eight cities is a reflective of the economic strength that these cities have, that attracts new settlers as well as creates a conducive environment for natural population growth,’ said Sanjay Dutt, executive managing director of Cushman & Wakefield India.
‘We see a higher demand in the mid ranged segment in these cities that further explains that there is a rapid growth in the economically viable population in these cities which is helping them and the cities in creation of wealth,’ he added.
The total demand for housing units is expected to increase at a Compounded Annual Growth Rate (CAGR) of 2.8% across India, with Bengaluru expected to the record the highest at 4.1% followed by Pune and Hyderabad. NCR is expected to see the highest demand of 381,000 units in mid and high end segments from 2012 to 2016.
In the south Bengaluru is expected to see the highest demand for 338,546 units, Chennai 257,796 units and Hyderabad 199,575 units, or around 45% of the demand in the mid and high end sectors.
In the western region, Mumbai is expected to see a demand for 188,708 for mid and high end units while demand in Ahmedabad is predicted at 173,394 units. Pune is estimated to need 144,422 units while Kolkata’s mid and high end demand is predicted at 77,000 units.
‘The residential housing demand can be seen as an indication of the current and future economic activities in these cities. The majority of the growth in demand in the top eight cities is expected to come from the services sector, in cities of Bengaluru, Hyderabad, Mumbai and NCR. Pune and Chennai will see demand on account of both services as well as manufacturing sectors,’ explained Dutt.
‘Ahmedabad’s demand, in addition to migrant population, is driven by an indigenous growth in population and also many re-settlers who intend to return to the city after having spent a fair deal of time in other locations across the globe,’ he added.
Gurgaon is emerging as a hotspot for luxury residential housing with some projects selling at around Rs30,000 per square foot whilst most other high end projects are selling at around Rs14,000 per square foot. At the opposite end of the scale in Greater Noida the current rate for high end apartment projects is around 6,000 to Ra8,000 per square foot.
Bengaluru is expected to be the most active residential market in the next five years. The demand for residential units in the mid and high end categories is expected to be 191,708 units in the next five years.
Of the total demand in the two categories, new mid-ranged demand would be approximately 75% with only 68% of the necessary supply currently in the pipeline under various phases of planning and construction.