Mumbai beats slump in housing projects with emphasis on affordable homes

MUMBAI: New residential project launches saw a steady quarter-on-quarter decline for the last four quarters, corresponding with the announcement of the stringent Real Estate Regulatory Act ( RERA) in March 2016 and demonetization in November 2016, says a real estate consultancy.

A Cushman & Wakefield report on Monday said the top eight cities saw the launch of about 25,800 units in the first quarter of 2017, registering a 16% decline from the corresponding period last year. Overall, residential launches fell by about 8% from April 2016 to March 2017 compared to the same period in 2015-16.

However, the Mumbai Metropolitan Region saw a huge 54% jump in new launches between April 2016 and March 2017, mainly due to builders offering affordable homes. In the same period, Delhi-NCR saw a massive 50% drop.

The share of affordable segment in total launches improved to 30% from 25% in 2015-16; the high-end and luxury segments fell to 11% from 13%."While sales have been weak across segments, it has been prominent in the high-end and luxury segments over the last quarters owing to demand-supply mismatches," it said.

In Delhi-NCR, Bengaluru and select locations of Mumbai, the combined impact of the prolonged sales slowdown and the pressure of mounting inventory led to a price decline."Developers have restricted new launches and are reducing the effective cost of their offerings by bundling in incentives and add-ons to clear the inventory backlog,'' said the report.

Builders launched a higher number of subvention schemes, such as pay 5% now, 95% on delivery, and some developers offered assurances of compensation refund of difference, if prices decline in future. "Developers are focusing on completing their existing under-construction projects, especially the ones at an advanced stage, to avoid contravening RERA 's rules and facing action,'' it said.

"Launches in the residential sector are expected to remain restricted over two-three quarters as developers will be making intrinsic changes to their business structure, operations and marketing strategies to comply with RERA norms,'' said Anshul Jain, MD, India, Cushman & Wakefield.