New housing launches decline sharply by 21%; sales at 5-year low in 2015

MUMBAI: New residential launches and sales declined sharply last year, the lowest since 2010, across top eight property markets in India. While the sales volume during the year was similar to that in 2014, new launches fell sharply, by 21%, said a Knight Frank India report.

Mumbai property market witnessed the sharpest drop — 36% — in new residential property launches during the year, followed by 27% and 20% decline in Bengaluru and the National Capital Region (NCR), respectively.

“Indian real estate had both good and bad news in 2015. While the office market grew from strength to strength, residential did not perform as expected. Office market saw a record absorption at 40.4 million sq ft; the highest since 2012,” said Shishir Baijal, chairman & managing director, Knight Frank India.

“Residential, on the other hand, continued to slow down with launches at a five-year low, despite the festive season. Sales in 2015 were lower than 2014 levels. Despite the 125 bps rate cut by RBI, demand did not see an uptake. Our outlook for 2016 remains muted. To further revive demand, it is important to transmit the benefits of the rate cuts to consumers.”

Vacancy levels for commercial spaces touched a record 8-year low to 15.8% in 2015 from 17% in 2008 after peaking out in 2012 at 21%. According to Baijal, supply of quality office space is now a concern with vacancy levels moving to an 8-year low and firming up of rentals. Realty market in the Mumbai Metropolitan Region (MMR) remained stagnant as reforms failed to cheer and housing consumption slipped to pre-2014 general election stage, said Knight Frank India. In MMR, new launches in the second half of 2015 were down 23% from a year-ago period, while demand shrunk by 6%.