Delhi NCR - 4 Year Property Price Trends

The Following Chart shows the price trends of Average Residential Apartment Prices in Delhi NCR - Noida, Gurgaon, Faridabad, Ghaziabad and Greater Noida between 2007 and 2011.

Data Source - Goldman Sachs Property Research.

Do you think this is in-line with the National Housing Index ?

4 Years Property Price - Chennai Vs Bangalore Vs Hyderabad

The following Chart Shows the Movement and Comparison of Average Residential Apartment Prices in Chennai Vs Bangalore Vs Hyderabad in Rs / SFT


This is for Average Residential Apartments and excludes High End or Luxury Apartments.
Data Source : Glodman Sachs Properties Report.

Last 4 Years Bangalore Property Price Vs Sales - Analysis

We would like to share with our readers Home / Apartment Prices Vs Sales in Bangalore in the last 4 years 2007 to 2011. Doesn't include Luxury Apartments. The Average ones that are being sold for the Middle Class is the focus of our study.

In the Chart Below
Maroon Line - Average Property / Apartment Price / SFT LHS
Blue Line - Sales in Mn SFT / RHS
As evident from the Graph above, Bangaloreans / Bengalurueans made their Home Purchases in-line with the Rising Property Prices. Except in Q2/Q3 2009 when the property prices bottomed out, over 7.5 Mn SFT of apartments were absorbed and now when the prices have hit an all time High of Rs 3300 / SFT, Sales has also shot up. The herd mentality of Software Engineers ;-)

Price correction eminent in Mumbai Property Market

Mumbai residential prices registered CAGR of 14.6% over the last 8 years. Anecdotal analysis shows CAGR growth of 9-10% over the last 2-3 decades. We believe the unprecedented growth in Mumbai prices is not sustainable and will undergo mean revision over the next 1-2 years.

Ears on the Ground and site-visits verified availability of discounts up to 5-7% depending on the project. Developers have launched promotions such as absorption of pre-EMI interest till delivery, floor rise waivers, partly furnished apartments to attract customers. Significant discounts are only available to those who are ready to make advance payments. We continue to believe developers will oblige with further discounts (15-25%) as volumes continue to dip in 1HCY12.

The new FSI rules have increased the developable area by 35%. For example – If the permissible FSI on a land parcel was 1.33 earlier, it will now be 1.8. Similarly FSI for Mumbai suburbs capped at 2.0 will now translate to developable area using FSI of 2.0 X 1.35 = 2.7. This is good news for developers and buyers as well.

Historical Housing Loan Accounts Data

The following Chart Shows the Historical Housing Loan Accounts Data in India. By this we can estimate the top 5 Real Estate Markets in India - Mumbai, Delhi NCR, Bangalore, Chennai and Pune.

Bengaluru + Chennai - Residential Realty Update

Bangalore / Bengaluru
Absorption in Bengaluru remains healthy; average for the past one-year is more than 6msf per month.

New launches were the least in past one-year. 4msf of new launches compared to monthly average of 7msf for the past one-year.

Inventory level maintained at 80msf, high but not alarming. Inventory level in months of sales is at 15, within the range of 13-15 for past 12 months.

In nutshell, even after series of launches, high absorption has helped inventory level to keep in check. While absorption at ongoing rate and slower pace of new launches can keep the prices stable or help them to rise, a weak quarter in terms of absorption can push the inventory level higher and result in price correction.

Chennai
Absorption in Chennai has come down to 3msf from 5msf six months back; however, it is still much above the level of 1-1.5msf it witnessed two years ago.

Absorption in October was at a respectable level of 3msf, considering the city’s appetite.

New launches have reduced considerably due to lack of approvals from government authorities. Launches in the past three months together were as low as 5msf, which is lower than the average monthly launch a few months back.

The slower pace of new launches and reasonable absorption levels have reduced the inventory level to 32msf from 41msf six months back. Inventory in months of sales is also at a manageable level of 12.

In nutshell, the city is well placed compared to most other metros in the country. Slower pace of new launches combined with reasonable demand has
managed the property prices to stabilise at current levels and we don’t see possibilities of significant property price correction here.

Mumbai + Pune - Status of Residential Realty

In Mumbai, absorption has been declining since November 2010; absorption at 6msf is at its 25-month low.

New launches at 4.5msf less than half on YoY basis; however, launches can jump up sharply, if the approvals are back on track.

Even though new launches have reduced considerably, the reducing absorption level has kept inventory levels at 99msf. The inventory in months of sales is 16 doubled from 8 in September 2010. Though the inventory level has not increased since the past 20 months, considering large number of projects awaiting approvals, this figure can go up sharply. This is not a good sign for Mumbai property prices.

In nutshell inventory level is currently at a manageable level; however several projects nutshell, however, are awaiting approvals for launch. In case the approval process fastens, there will be a sudden rise in the inventory, which will push the developers to reduce the property prices. The savior is considerable improvement
in absorption, which seems unlikely at the current property price levels.

Pune
Absorption in Pune seems to follow absorption trend in Mumbai. Absorption in October 2011 is 3msf; at 23 months low.

New launches have declined considerably since beginning of the current calendar year. From the peak of 8msf in January, it has come down to as low as 2msf.

Inventory level declined from 61msf in January 2011 to 48msf in October 2011. This is not due to high demand but due of lack of new launches. The inventory in months of sales has started rising back. From the low of 11 in June, it has risen to 15.

In nutshell, Pune seems to follow Mumbai real estate market and we believe it is facing the same problem of possibility of sharp jump in new launches. The
market may witness property price correction unless developers time their launches in such a manner that not many properties hit the market at the same
time (this is unlikely scenario as scenario, most of the developers are keen to monetise their assets at the earliest).

Delhi NCR - Real State of Realty

As we end the year 2011, here is the Real State of Real Estate in India.

Absorption in NCR at 10msf has reduced considerably from 15-20msf witnessed six months back. However, it is significantly higher than the lows of 3-5msf attained in 2008-09.

The dearth of investor demand has pushed new launches to as low as 8msf, compared to 20-25msf a year back. We do not see any possibilities of this demand coming back in the next six months primarily owing to high property prices and the uncertain economic scenario which will in turn keep a check on NCR months, new launches.

The inventory level at 132msf is higher than other cities; however, it has come down from the peak of 150msf in 2010, due to the slower pace of newer launches. Inventory in months of sales at 12 is higher than the two years average of 9, which is a concern.

In nutshell, inventory level at 132msf is high and in months of sales. It is at 12, higher than the two years average of 9 months. However, a micro analysis suggests that the Gurgaon and Noida markets are well placed with just seven months of sales each. New Delhi has an inventory as low as 2.3msf and being land scarce region, doesn’t have pressure on price. Greater Noida has seen new launches at an aggressive pace, but without adequate absorption. We believe Greater Noida is set to witness price correction, which is unlikely for Gurgaon, Noida and New Delhi.