Residential real estate launches declined 35 per cent in 2017 as property developers grappled with changes such as the Real Estate (Regulation and Development) Act or RERA, demonetisation, and the goods and services tax (GST) roll-out, according to a study.
The affordable housing segment proved to be the silver lining in an otherwise dull residential real estate market in 2017.
The number of residential units launched across top eight cities last year was estimated at 74,000, with Mumbai constituting 31 per cent of the total new units, followed by Pune (15 per cent), said property consultancy Cushman & Wakefield in a report.
Only the affordable housing segment saw a year-on-year growth, of six per cent, with Mumbai leading the trend, it said.
''Even as developers grappled with the impact of business fundamentals like RERA and the GST over their business, the clarity brought in by the government in the affordable housing definition and benefits led to this growth. Mumbai contributed the highest to affordable category, recording over 11,000 new units. Pune with the launch of 5,700 units saw the second-highest numbers,'' the report said.
In Ahmedabad, overall housing unit launches fell sharply by more than 50 per cent, from 9,700 units in 2016 to 4,680 units in 2017. As against this, affordable housing units fell just marginally from 2,590 units in 2016 to 2,532 units in the just concluded calendar year.
An apartment priced up to Rs55 lakh would typically fall in the category of an affordable housing unit in Ahmedabad.
Hyderabad saw a y-o-y decline of over 50 per cent in the launch of residential units, mostly due to an already large inventory overhang. Bengaluru witnessed a 47 per cent decline in new launches, awaiting clarity on the Karnataka RERA, which went through numerous iterations before acceptance, it said.
The Delhi NCR market, on the other hand, saw a relatively lower impact, with new launches reducing by 14 per cent y-o-y in 2017. This market is also suffering due to an oversupply of residential units.
While demand for projects closer to office locations is high, most project launches have been in the peripheral areas in the past few quarters. The end-user interest in futuristic locations is usually low, it said.
''2017 is a precursor to the much-needed stability of the residential market as seen in the nature of launches. The sector has seen an eventful year with drastic statutory changes. It will continue to realign itself to end users' demands well into 2018. There will be stability in the development environment as most states are set to put the regulatory and the taxation policies in place, making development more standard process oriented,'' said Anshul Jain, country head & managing director (India), Cushman & Wakefield.
''The end-users' interest in the residential sector will become positive as investments will be legally protected and there would be commitment on timely delivery from developers. While residential markets will improve in 2018, it will need a few more quarters to experience healthy growth trend, backed by strong economic fundamentals and a firm legal structure,'' he added.