Accommodation Times News Service
Owing to government’s demonetisation move on November 8, 2016, realty sector was brought to complete standstill with 23% fall in the residential sale across top eight in July-December, a report by Knight Frank said.
“The fourth quarter numbers are a testament to the effect that the demonetisation move has had on the real estate market of the country that was barely recovering from its earlier sloth. Sales volume dropped by 44% YoY in Q4 2016 and new launches fell by a massive 61% YoY during the same period. At 40,940 units, the Q4 2016 sales volume is at its lowest quarterly level since 2010. The average quarterly sales used to be in excess of 90,000 units in 2010. The new launches number is much worse at just 24,300 units in Q4 2016, which is not even one-fifth of its peak quarterly level observed during 2010,” the report mentioned.
New launches and sales in the premium segment also plummeted with a noted decline by 69% and 16% respectively in H2 2016 compared to H2 2015. The sales drop that even affected the usually resilient Bengaluru during Q4 2016 resulted in a massive notional revenue loss of more than `226 bn to the real estate industry across the top eight cities.
Among the top eight cities, National Capital Region is the worst-affected market followed by Bangalore and Mumbai.
“In NCR, sales volume dropped by 53% YoY in Q4 2016 and new launches fell by a massive 73% during the same period. At only 6,765 units, the Q4 2016 sales volume is at its lowest quarterly level since 2010, down by 79% since the quarterly peak of 31,990 units in Q4 2010. The new launches number is much worse at just 3,710 units in Q4 2016, which is 91% lower than the peak of 40,136 units witnessed in Q4 2010,” the report chimed.
Coming to Mumbai, the report confirmed lowering of sales by 54% and 41% respectively in the premium markets of South Mumbai and Central Mumbai, thereby making it the worst hit market.
In a bid to understand the downfall of the realty sector in Mumbai, the report reasoned, “The new landscape of transparency, efficiency and governance brought collectively by the demonetisation scheme, Benami property law and the real estate regulation is challenging the status quo of real estate investment and transactions. On the other hand, from the perspective of end users, the cause of affordability is not served enough either by the decline in home loan rates brought by policy rate cut of 175 basis point in this interest rate cycle or the tax incentives for housing offered in the 2016 budget. All these factors translated in weakest half yearly and annual performance of the MMR residential market in at least seven years.”