Residential real estate saw a significant fall in supply in the quarter ended June, while office space recorded a steep decline in demand, as well as supply, in the first half of the year, according to reports by international consulting firms.
Meanwhile, real estate prices rose four-12 per cent across most cities.
Housing project launches declined 44 per cent in the quarter ended June, compared to the previous quarter, owing to delay in securing approvals, significant inventory in certain locations and postponement of projects to ensure these were launched in the festival season, says a report by Cushman and Wakefield.
The office space market did not fare any better. The top seven cities together recorded a 35 per cent fall in absorption in the first half of the year, compared to the corresponding period last year, according to a Jones Lang LaSalle (JLL) report. Supply fell 52 per cent during the period and contraction in demand saw developers execute projects slowly.
In the residential segment, Mumbai saw the biggest fall (73 per cent) in supply in the quarter ended June, compared to the previous quarter. In the quarter, just 1,200 units were launched in Mumbai, against 4,460 units in the quarter ended March. And, only nine projects were launched in the second quarter.
"New projects to be launched are likely to be concentrated in Mumbai's Goregaon and Mulund areas, as there is inherent demand for residential properties in these locations," said Shveta Jain, director (residential services), Cushman & Wakefield India.
In the first six months of 2011, Mumbai accounted for 32 per cent of office space absorption. However, in the first six months this year, it recorded just 19 per cent of the absorption, while the Delhi National Capital Region (NCR) accounted for 21 per cent of the absorption, compared to 18 per cent in the year-ago period.
"The primary reason for this was healthy pre-commitments among new completions in the Delhi-NCR region, which were better than those in Mumbai", said Hariharan Ganesan, senior manager (research & REIS), JLL in India.
On an average, the share of net absorption from new completions during the first half this year in Mumbai and NCR stood at about 60 per cent, against the national average of 29 per cent.
In the residential segment, NCR saw a decline of about 24 per cent in new launches in the quarter ended June, with Noida recording the highest number new unit launches. About 2,100 units were launched in NCR, against 2,760 in the previous quarter.
Despite the fall in demand and supply, prices in the mid-income category in Gurgaon (NCR) rose six per cent. The luxury category in Gurgaon recorded a rise of 10 per cent in prices, compared to the previous quarter.
Jain said several projects in Gurgaon were in pre-launch stages and were likely to be launched at higher prices in the coming months, raising the market benchmark. In Mumbai, mid-segment prices rose 10-12 per cent, while prices in the high-end segment rose seven to nine per cent.
"Values are expected to remain stable in the short term. Developers may also offer attractive options and incentives to attract buyers during the festive season," Jain added.
Pune, however, seemed unaffected by the slowdown in the economy, recording the highest number of units launched in the second quarter, estimated at 6,600. These catered to the mid- and high-end segments. The launches were 24 per cent higher than those in the previous quarter and accounted for 37 per cent of the country's new supply.
In the quarter ended June, Bangalore saw a 67 per cent drop in new launches at 970 units, against 2,900 units in the previous quarter.