From ET Realty
MUMBAI: At last, some good news for home-buyers. Launch prices for mid-segment new residential projects witnessed 4-20% drop in 2015 in select micro markets of Mumbai, National Capital Region and Bengaluru. The biggest decline of 20% in average weighted basic sale price was registered in Goregaon suburb of Mumbai where the per sq ft rate averaged at Rs 10,500 in 2015, showed a report by Cushman & Wakefield.
The property consultant has compared average 2015 launch prices in these micro markets with average weighted basic sale price over the last 2 years.
Goregaon was followed by Thane that saw 18% decline in launch prices. Southern Peripheral Road in NCR’s Gurgaon also saw a decline of 10% in average base selling price of new launch projects compared to 2013.
In contrast, most of the sub-markets in Bengaluru witnessed steady launch prices except in Far South and Western sub-markets where average new launch prices in 2015 declined by 2-7% compared to 2013. South East micro market of Bangalore was an exception to the rule where both the Average Weighted Basic Sale Price (19%) and the Average Ticket Size (18%) of apartment saw an increase.
“A correction of the launch prices will ensure attractiveness and relevance of these locations to the end users. The economic confidence slowly creeping back into end user sentiments aided by a corrected Base Price as well as lowered ticket size is likely to provide the needed boost to improve sales,” said Shveta Jain, Managing Director, Residential Services, India Cushman & Wakefield.
The report has tracked the development activities in locations of Dwarka Expressway, New Gurgaon Southern Peripheral Road Sohna, Noida Expressway and Noida Extension in NCR; Thane, Goregaon and Malad in Greater Mumbai and South-West and Southern sub-markets in Bangalore.
With declining number of new launches amidst a slump in buyer’s interest, Delhi-NCR witnessed new unit launches aggregating around 23,000 units in 2015, about 79% of the units were launched in the locations of Dwarka Expressway, New Gurgaon Southern Peripheral Road Sohna, Noida Expressway and Noida Extension in NCR. Half of the total new launches in 2015 were in the mid segment at approximately 12,400 unit.
According to Cushman & Wakefield, with a view to attract buyers, developers have tried to bring down the ticket size of their offerings by either reducing unit sizes or reducing capital values or both. Such efforts from developers have been witnessed across submarkets especially in Southern Peripheral Road, New Gurgaon and Noida. Dwarka Expressway and Southern Peripheral Road saw the largest decline in launch prices in NCR of 10% as against 2013 in Base Selling Price.
Mumbai witnessed a 37% decline in residential unit launches to 15,735 units, from the corresponding period last year with Mulund, Thane, Goregaon and Malad accounting for nearly 51% of total launches during 2015. The new launches in 2015 have been smaller in configuration therefore with reduced base selling prices and smaller units, the ticket size (cost per apartment) has also seen a decline in these key markets.
The sub-market of Malad witnessed ticket size reduction by 15% despite average launch prices (mid segment) declining by only 8% primarily due to significantly reduced average unit sizes. Thane and Goregaon witnessed a decline in Average Weighted Basic Sale Price by 18% – 20% as well as reduced ticket size of new projects in 2015 compared to 2013, the report said.
In Bengaluru, unit launches in 2015 declined by 62% to around 15,600 in comparison to 2014. The city has witnessed slower sales of existing inventory, resulting in reduced new unit launches. However, in comparison to the other cities, Bengaluru has shown an exceptionally stable market trend. While the new unit launches have not seen a reduction in the unit sizes or ticket sizes, the focus segment has changed over the last two years.
According to Cushman & Wakefield research, in 2015, a majority of the new launches (83%) were now concentrated in the mid-segment. While new launch prices have remained stable across most sub-markets, Far South saw developers reducing the Average Weighted Basic Sale Price in mid segment by 7%, to remain competitive. South East micro-market of Bangalore was an exception to the rule where both the Average Weighted Basic Sale Price (19%) and the Average Ticket Size (18%) of apartment saw an increase.
New launches in 2015 were concentrated mainly in few submarkets including Far South and South-East sub-markets. Approximately 47% of the new unit launches in 2015 were witnessed in Far South, South east and West sub-markets in Bengaluru. A closer examination of the ticket prices and base selling prices in these sub-markets reveals that Bengaluru continues to be a stable market in terms of ticket prices, with developers not always resorting to lowering of selling prices or reducing apartment configurations to make them more affordable, the report added.