PropTiger Q3 Report FY16: Top 3 Cities That Performed Well On The Ground
After a slow revival in 2015, the real estate sector is expected to witness a better 2016. According to the recently released PropTiger Datalabs report, titled Realty Decoded– Q3 FY16, sales have increased for the first time in the past 10 quarters and there has been a rise in the number of new launches. This trend reversal in the third quarter of financial year 2016 (Q3 FY16) possibly indicates that 'the worst could be over for the residential real estate market'. At least, the downside, if any, might be limited from here onwards, the report added.
The report analyses various aspects of the residential real estate space, including launches, absorption, inventory and prices, across India's nine major cities. The cities include Ahmedabad, Bengaluru, Chennai, Gurgaon, Hyderabad, Kolkata, Noida, Mumbai and Pune.
Anurag Jhanwar, Head, Consulting and Data Insights, PropTiger.com, said, “While total launches increased as against the previous quarter, new launch sales within these grew much faster at 23 per cent as compared to three per cent of old projects, which possibly indicates that buyers are regaining the confidence in the light of improving macro-economic factors.”
“This change might be linked to the kind of developers entering the market, the quality of construction, location of launches and the pricing. However, we shall have to wait and watch whether this trend will sustain in the coming quarters,” he added.
Here are the top cities that performed well during the period:
In Gujarat's Ahmedabad, launches saw a 60 per cent increase compared with same quarter last year. The city has many infrastructure projects, including existing oil, gas and energy industries, and automobile manufacturing industries, which are driving the demand for real estate in the city. The city's demand pattern is largely affordable, with close to 95 per cent of the demand in the below Rs 75-lakh budget segment. Prices and absorption both saw an uptick over the previous quarter at five per cent and 10 per cent, respectively.
India's Silicon City, Bengaluru, has seen the highest appreciation, with prices witnessing a rise of 13 per cent over the past 10 quarters. This can largely be attributed to a strong commercial offtake by IT/ITeS and e-commerce segments. On a year-on-year basis, the city's property price appreciated by 4.1 per cent. The sales rose close to 15 per cent in the quarter. Meanwhile, the city saw 15 per cent less launches when compared to the same quarter of the last fiscal and with only 13 per cent demand coming from investors it largely remains an end user driven market. With close to 70 per cent demand coming for the less than Rs 75-lakh segment, it only reiterates the fact that how this segment is mainly driven by individuals working in the IT and ITES industry and the key driving factors for this segment are social infrastructure, proximity to workplaces, good physical infrastructure and access to medical and educational facilities. However, the city continues to struggle with a large unsold inventory.
With Andhra Pradesh announcing Amaravati as its state capital, the current joint capital of Telangana and Andhra Pradesh, Hyderabad, witnessed an increase in the number of launches. Hyderabad, with its flourishing IT/ITeS industry and a rising population of young workforce, is once again becoming buyers' hot pick. The jump in new launches was close to 140 per cent in the city compared with the same quarter last year. While 1,389 units were launched in Q3 FY15, nearly 3,200 units were launched in Q3 FY16.
The erstwhile city of Nizams' is also not far behind when it comes to pricing. The real estate prices in the city have gone up by 5.6 per cent Y-o-Y. The prices in the city have been consistently rising and have recorded a 12 per cent increase in the past 10 quarters. These prices had hit a rock bottom.
With steady absorption backed by an improving demand, the city's unsold residential inventory has also come down. Sales figures were also up 12 per cent compared to the previous quarter. With a fundamentally strong infrastructure, manpower and ecosystem, Hyderabad is showing signs of a revival for the real estate in its peripheral areas.
Here are some detailed reports related to the key findings of the Q3 FY16 report:
PropTiger Q3 Report FY16: Positive Sentiment Sets In, End Users Show The Way
PropTiger Q3 Report FY16: Real Estate Sector May Be On The Path Of Revival
PropTiger Q3 Report FY16: In The Lap Of Luxury, High-End Segment Looks Promising
PropTiger Q3 Report FY16: What Makes Pune A Real Estate Hotspot?