Delhi: Launch of new units dipped by half in 2014

The Indian real estate market continues to witness a dip. This was yet again proved by the decline seen in the launch of new housing projects. This decline was disclosed in the recent report released by Cushman and Wakefield.

During the third quarter of 2014, launch of new housing projects in the Delhi NCR saw a decline by 54%. The Delhi NCR, Mumbai, Chennai, Kolkata, Pune, Hyderabad, Ahmedabad, and Bangalore saw the launch of 43,800 housing units in the past year.

The sharpest decline in launches was recorded in the affordable segment, which declined by 52% in Quarter 3, 2014 as against Quarter 3, 2013, while the Delhi NCR saw a dip of 54% in the same period. Real estate experts and developers speak about the possible reasons behind this dip.

Ajay Singal, secretary of Credai-Bhiwadi and treasurer of Credai-NCR and director Avalon Group says: “It is true that developers are facing major obstacles in coming up with a new residential projects. Land purchase has become a tedious and expensive process with long-drawn procedures involving government permissions and approvals. Also, options which are available for cheap finance for developers are limited and again the process is burdensome. With the overall slow down in the economy and frequent fluctuation, majorly negative, of Indian currency in global market, the cost of delivering a residential project has gone up considerably.“

In July-September, the Delhi NCR saw the launch of only 4,500 units which is less than half of what was seen in same period in 2013.

“A lot has happened in the Indian economy in past few months. Developers have been facing delay in approval and clearances, which could be a possible reason behind this slowdown,“ Navin Raheja, chairman and managing director of Raheja Developers Limited, said.

Dhiraj Jain, director of Mahagun Developers, says: “As the Delhi NCR saw 54% decline in new housing projects, it has gradually caused a drop in the economy. Delay in getting approvals for projects, unavailability of land due to the tough land acquisition law and a slackening demand for housing from investors and end buyers has caused this dip. One major factor that is dissuading developers from launching new projects is the crunch in liquidity that they are facing due to the guarded approach of banks; this has also increased their construction cost.“

Some of the factors that have majorly hampered the work of developers in the NCR are low market sentiments, unavailability of land due to the tough land acquisition law, and delay in clearances.

Developers are also looking at clearing existing proj ects that they have in the wake of significant unsold inventory, waiting for demand to get the desired push in order to start new projects.

The priority here is to reinvigorate demand. Suggesting a way out, Jain further adds by saying, “A demand for encouraging policy or slight dip in interest rates can boost realty in Delhi-NCR region in future and then we could see new launches happening.“

Source:http://content.magicbricks.com/industry-news/delhi-ncr-real-estate-news/delhi-launch-of-new-units-dipped-by-half-in-2014/79962.html