Slowdown hits MMR residential, sales fall 5% in 2019
A More Pronounced 14% Year on Year (YoY) sales declined in Second Half (H2) of 2019, says a report released by Knight Frank India. New Launches were down 6% YoY in H2 of 2019.
By Varun Singh
A report launched by Knight Frank India shows that the Mumbai Metropolitan Region’s residential marker has taken a hit when it comes to sales. The sales in the year 2019 according to the report were down by 5%.
Knight Frank India today launched the 12th edition of its flagship half-yearly report – India Real Estate: H2 2019 – which presents a comprehensive analysis of the residential and office market performance across eight major cities for the July-December 2019 (H2 2019) period.
The report showed that the number of homes launched in Mumbai increased by 7% YoY to 79,810 units in 2019 but recorded a 6% YoY decline to 35,988 units in H2 2019. While the number of homes sold fell by 5% YoY to 60,943 units during the calendar year 2019, a more pronounced 14% YoY decline to 27,212 units was registered in the second half of the year (H2 2019).
Affordable houses continued to dominate launches in MMR with 61% of the new launches in H2 2019 coming in the sub-INR 7.5 million (INR 75 lakh) category.
Thane market recorded the highest growth (36% YoY) of new launches in H2 2019 on account of many mega launches by some of the top developers of the city.
Residential real estate in MMR faced a difficult year with sales declining by 14% YoY in H2 2019 and by 5% YoY in 2019. The annual sales in 2019 came close to the lowest sales of this decade which was recorded in 2016, the year of demonetisation.
While sales have declined across micro-markets in H2 2019, the extent of decline was lower in the affordable and mid-segment markets of Peripheral Suburbs and Thane.
The ongoing economic slowdown, national and state elections in 2019, and the prolonged NBFC crisis have had their share of impact on consumer sentiments and affected the demand for real estate.
Weighted average home prices in MMR continued to correct in 2019, although marginally, by 2% YoY to INR 7,014 per sq ft. The prices have corrected by 14% from the peak of H2 2016.
Apart from reduction in base prices, several freebies such as no-floor rise, two-year free maintenance, free clubhouse membership, various subvention plans, GST waivers, assured two-year rental schemes and a host of other indirect discounts continue to remain in the market.
The actual discount offered during the transaction would also be higher as developers are more than happy to negotiate on the pricing in order to ensure that the deal is closed.
Quarters-To-Sell (QTS) for the MMR market went up from 8 quarters in H2 2018 to 9.3 quarters in H2 2019 due to slower sales velocity in this period.
MMR had the highest quantum of unsold inventory in India at 145,301 units, registering a 15% growth over 2018.
Gulam Zia, Executive Director– Valuation & Advisory, Retail & Hospitality, Knight Frank India, said, “The Indian economy has faced a challenging year in 2019 with the GDP growth rate slowing down and the resultant impact being witnessed across several industries. The residential sector in Mumbai was also impacted by the general slowdown as well as the continued effects of the credit crunch and NBFC crisis which has impacted end-user sentiments with sales declining by 14% YoY in H2 2019. We hope that the series of reforms that the government is undertaking would augur well for the revival of the economy as well as real estate sector.”