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You are here : IndiaNotes >> Research & Analysis >> Industries >> Construction >> Research

Real Estate: Impact is still small to generate new buying interest

Prabhudas Lilladher | 11 Apr, 2013  | Follow Author | Add to my Favourites 
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The uncertain economic scenario has imparted a cautious outlook to the sector, with tepid sales and inventroy levels rising across the country. Although the festive season led to new launches, the offtake has been subdued. Mumbai witnessed a slight increase in sales on the back of new launches; however, a slow offtake, leading to inventory pile-ups. Bengaluru, which has been on a upward trajectory, took a breather this quarter.


The much awaited monetary easing came by in the last two monetary policies, with a 25bps repo rate cut in both, which shall help in improving the overall buying sentiment in the sector. Though further easing in the near-term looks tight, given the inflationary concerns, the pro-growth stance adopted by RBI is positive for the sector.


Company balance sheets are witnessing an improvement, with companies steadily repaying debt and exhibiting caution on land bank addition. The easing of interest rates is further expected to help companies in reducing financial costs.


BSE Realty Index was down 18% for the January-March period, while the SENSEX was down 3.6% for the same period.


Residential

After two extremely strong quarters, Bengaluru witnessed a drop in sales and a rise in inventory levels as launches have kept pace.


Post the slew of new launches in Mumbai during the festive season, sales have witnessed a marginal pick-up. However, the response has been tepid, resulting in inventories rising further. Delhi saw a drop in sales, post a healthy previous quarter and inventories continued to rise.


Post several months of slackness, Mumbai registration data sprung up a positive surprise, with a sharp 42% MoM growth, partly on account of the festive season and also on account of the year-end registerations prior to the increase in ready reckoner rates. The month of January, too remained firm, registering a growth of 26% YoY. The impact of island city launches like that of Lodha’s ‘Blue Moon’ & ‘Bombay Realty’ ‘Island City Centre’ is further likely to strengthen registration numbers, going forward.


Despite the monetary easing, the impact is still small to generate new buying interest. However, RBI’s pro-growth stance keeps us hopeful of a more significant move.


An interesting trend is the recent drop in rentals in the high-end segment in Mumbai, indicating a large pool of investor units available for rent not finding the requisite tenants. The existence of low rentals and high prices may be a reflection of the fact that Mumbai investors are not sensitive to rental yield of properties.


Commercial

Commercial market continued to remain sub-par as the cumulative take-up of offices across India’s seven largest cities declined by 24% to 27.3m sq.ft. in the wake of declining domestic economic growth and global worries.


However, Mumbai Lease registrations rebounded as registrations for the month of January grew 20% YoY & 13% MoM due to increased take-up activity. The increase in take-up levels and pre-commitments in new supply resulted in stable availability ratio at 23%.


The Bengaluru commercial market moderated in Q4 as the take-up of office space in the city dropped to 1.6m sq.ft, a QoQ decline of 47%. The overall office space availability ratio in the city rose, though marginally, for the first time in the past three years.


In NCR, volumes declined by 9% QoQ to 1.2m sq.ft, with vacancy levels remaining steady at ~31%.



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About Prabhudas Lilladher

Prabhudas Lilladher has a nationwide distribution network, consisting of branches, franchisees and associates, providing a comprehensive gamut of financial services in the Institutional and Retail domain. Their services includes Equity, derivatives; margin funding, mutual funds, PMS, IPOs and online trading.

 

For more information please write in to [email protected]

Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.




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