Some bad news for real estate developers across the Country. Post Demonetization, the investment in real estate has gone down and the launch of new houses in the first quarter of the present year has declined by more than 19% across eight key cities. Mumbai and Gurgaon recorded the minimal launches during this quarter. Research shows that the number of home launches across the top eight cities in the Country went down from 28,428 units to 22,897 units. The real estate developers are anticipating a dip in the demand due to the demonetization which is the main reason behind the decline.
The real estate sector in India has been hugely impacted by the demonetization, the transaction activity has slowed down and buyers as well as sellers are waiting for the sector to tide across the volatility in the market. The unused inventory of housing projects has shown a slight fall to 4, 71,855 units from 4, 87,043 which is due to lower new launches and developers waiting to clear the unsold inventory. The overall housing demand across the Country showed a minor decline of 1.2%. Research was carried out across eight cities in the Country and Kolkata had the highest growth in the number of new launches. It stood at a strong 53.9% with an unsold inventory of 0.5%. Mumbai, Gurgaon, Noida and Chennai have shown a negligible rise in the launch of new houses during the first quarter. Gurgaon has only a 0.78% rise in the launch of new houses. Mumbai had a rise of 3.7% and Chennai had a rise of 17%. Similarly, Pune, Hyderabad and Bengaluru have recorded a major fall in the new launches during the first quarter.
It is expected that the implementation of the Real Estate Regulation and Development Act will help in the execution and completion of under construction projects on a timely basis. It is expected that the developers will rush to complete the previously launched projects so as to avoid penalties. Many developers have halted working on the currently launched projects; hence such projects remain under work in progress because the developers do not foresee an increase in the demand for the coming quarter. In order to boost the real estate sector, Gurgaon has reduced the property circle rate by 5% across the city. The same was decreased in the previous year as well; overall the property circle rate in the last two years has fallen by 20%. With this, the developers are hoping to clear the inventory and increase the space of the real estate business. It is still a big question if this rate cut will boost the sales in Gurgaon. As for the remaining cities across the Country, the buyers and sellers will have to wait for the sector to pick up and clear the inventory. Without the clearance of inventory, the developers will not be interested in launching new projects across the cities. It will be interesting to note how the sector bounces back and regains momentum.