Mid-end homes see rise in supply

Prices have come down in a few locations. Builders, too, have realized the demand potential 

 

There has been a 43% increase in residential units being launched in the first quarter of the calendar year 2014 compared with the previous quarter, according to Cushman and Wakefield’s quarterly report released towards the end of April. Interestingly, the report also notes that there has been a 94% jump in launches in the mid-end segment along with a decrease of 38% in the high-end segment. The data was compiled for eight cities—Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, National Capital Region (NCR) and Pune. A mid-end segment property would cost Rs.30 lakh-1 crore, depending on micro markets across cities.

What has caused this change in strategy for developers? “They have realized that the demand actually lies in that segment (mid-end),” said Shveta Jain, executive director-residential services, Cushman and Wakefield. But it’s important to keep in mind that this sharp increase comes on the back of fewer launches, across segments, last year.

The report further adds that this spurt in mid-end segment, however, has not happened across all geographies. “Launches in NCR have been far and few. It is markets such as Bangalore, Chennai and specifically Mumbai that have been the real drivers,” said Jain. This is mostly because of the pent up demand, which tends to get activated with first-time buyers and investors entering the market and who are more comfortable buying at the soft launch stage.

The other part of the puzzle is the pricing of these new launches. “Though the demand was always there, the prices had gone above the comfort level of buyers. But now prices have rationalized a bit and have corrected as well,” added Jain. More buyer-friendly and flexible payment schemes have also encouraged buyers.

In terms of demand, a buyer’s strength to purchase depends largely on the bank’s ability to lend. “Banks want to deploy money in this segment because there is both demand and supply here now, and so the credit offtake is high,” said Sunil Kumar Dahiya, managing director, Vigneshwara Developers Pvt. Ltd, a New Delhi-based real estate company. He also added that based on the macroeconomic scenario, banks may take a view that repayments from the high-end segment may be a challenge.

Developers have gone a step ahead and changed the configuration of the units to build more moderate sized units, which are affordable for buyers. The location of these launches, too, has changed. “For instance, in Mumbai, there have been launches in Chembur, where there is demand. If a micro market is livable with good infrastructure and connectivity, it will attract buyers,” said Jain. Projects where people can’t live in the near future have not seen that much of demand. Dahiya seconded the view and said that buyers are now very concerned about the social. 

 

NITESH KUMAR SINGH

PGDM 2ND
SOURCE-- MINT LIVE NEWS