The prices of new supply were 7% lower than the price of existing supply during the March quarter and yet the residential realty sector remained stagnant. Most of the demand during the fourth quarter was in the affordable and mid-segment, says the real estate rating and research agency
The fourth quarter of FY2012-13 saw the residential realty sector remain stagnant after some movement in the previous two quarters. “With FY12-13 not ending on a positive note, the spotlight now lies on the performance of first quarter of FY13-14. Market participants are looking forward to Q1 FY13-14 as this quarter is likely to give clues to the trends that will be followed in the year ahead,” non-brokerage real estate research firm Liases Foras said.
It said that National Capital Region (NCR) Delhi, Chennai and Kolkata have shown increased activity and Mumbai Metropolitan Region (MMR) is doing the fine balancing act with stability in sales and business turnover, while other markets such as Pune and Bengaluru are moving through a difficult phase.
“Much of it can be attributed to the slowdown in the IT sector, a point of overall saturation as well as other city specific issues. Additionally, it is known that these cities attract a lot of overseas funds which have dried up over the period due to concerns pertaining to the Indian economy. However, it is believed that these markets will emerge out of this scenario slowly and see a boost in momentum on the back of more infrastructural changes and revival in overall sentiment,” the report said.
According to Liases Foras, during the fourth quarter, most of the demand, in terms of cost range distribution, was skewed towards the affordable range (Rs25 lakh to Rs50 lakh) and the mid-segment (Rs50 lakh to Rs1 crore) range. “Now with the Union Budget 2013-14 giving a boost to the affordable segment through its policies such as additional interest benefit for first time buyers, formation of Urban Housing Fund and other policies to dissuade speculative tendencies, this trend is likely to continue,” it added.
Prices marching upwards
According to the report, during the fourth quarter, prices across the major markets on the whole showed an uptick over the past four quarters. While, Ahmedabad showed stability, other markets, especially Bengaluru, were on a rise. MMR continued to be at an elevated level with an upward bias.
The price correction in Mumbai city could not be sustained and it witnessed an increase of 3% during the fourth quarter. This follows a much required decline in third quarter of FY13. Thane witnessed a maximum price appreciation of 8%, followed by central and western suburbs with 6% and 4% rise, respectively. Panvel was the only region to see a marginal dip in the price level. It now remains to be seen whether the proposed 1% hike in stamp duty from October 2013 actually fructifies and affects the price level in the city, Liases Foras said.
In Hyderabad, the price saw a 3.5% rise compared with last quarter. According to the report, Hitech City seemed to be the most happening location with a 24% sequential price rise, while Chandanagar recorded a 28% increase. The North West suburb and the Central region recorded sequential rise of 6%, while prices in the North Eastern suburb plunged 10.3%.
For Kolkata, the prices were almost stable during Q4 of FY13. However, Central Kolkata and East Kolkata have registered a 9% and 7% sequential price rise followed by Howrah and South West Kolkata with 5%, each, the report said.
According to Liases Foras, Bengaluru has been witnessing persistent price appreciation for the past four quarters. During Q4, Bengaluru registered a 7% sequential price appreciation. Locations like Haralur Hebbal, Yelahanka, Kanakapura Road and Banashankari saw quarter-on-quarter (Q-o-Q) price rise in the range of 14% to 21%.
The price level in Pune continued to appreciate during the March quarter due to influx of overseas funds in the city. “About 15% annual price rise has been registered in Q4 FY12-13. All the suburbs, with an exception of Karve Road and Yerwada, have logged in a price rise. Sangamwadi saw a 9% Q-o-Q price appreciation, while Aundh, Pimpri–Chinchwad and Warje registered about 5% to 6% price increase,” the report said.
Sales performance across the cities
In terms of sales, on a sequential basis, the situation has improved in the NCR market. The region saw a major boost during the second quarter as the Noida extension property corridor resumed its development activity post the resolution of the land row problem. The second quarter or the festive season saw a sudden spurt in sales due to the festive season but the same could not be sustained for the subsequent quarter and sales declined. However, Q4 FY12-13 again saw the market displaying an astounding performance as bookings have opened for major residential projects in the Noida extension corridor. Small pockets like Bhiwadi and Raj Nagar Extension continue to be the focus for end user purchases.
Liases Foras said, “It can thus be observed that the contribution of NCR in the overall sales has increased, followed by Chennai. The region constituted 40% of the total sales of the country in Q4 FY12-13, compared to 33% in the prior quarter. Other markets like MMR, Hyderabad, Pune and Bengaluru have witnessed contraction in their chunk of sales in the past three quarters.”
MMR once again witnessed increased activity in the peripheral regions. The highest volume sales were recorded in Thane (W) with 856 units followed by Virar (W) and Ulwe. Kandivali (E) was the only location in the western suburbs with a substantial sale of 796 units. These locations also registered tremendous quarterly improvement in sales, it added.
Bengaluru has seen a persistent decline in sales largely because of price increases. In the last quarter prices surged 10%, while during the March quarter, prices rose 6%, the maximum across the nation. However, the decline in area sales can also be attributed to the shrinkage in average sizes of each unit on the peripheral regions. Significant drop was recorded in locations such as Kanankpura Road, Whitefield and Hosur Road, while Hennur Road and Electronic City saw sudden rise. Thanisandra, an offbeat location saw a substantial surge in sales from 39 units in the previous quarter to 518 units in Q4 FY12-13, on the back of Bhartiya City by Bhartiya Group.
Hyderabad, which has the most talked about residential market, saw a cyclical movement throughout the year on the back of a series of political developments in the state. In Q2 FY12-13, the Hyderabad market entered the positive territory. It had started evolving after prolonged sluggishness due to improvement in construction activity and easing of the political turmoil surrounding the Telangana issue. Gachibowli, Kondhapur, Madhapur, Kukutpally, Manikonda in the north-west region have emerged as the organised real estate corridor and the region contributes 71% of the total city sales. The brisk pace of progress of the Hyderabad Metro Rail phase-I further boosted the region's market in the previous quarter. However, the situation again turned grim in the final quarter. The prevailing uncertainty over the Telangana issue re-surged and sales plunged 46% on a quarterly basis and inventory shot up as high as 49 months in Q4 FY2012-13.
Decline in sales was also the order of the day in Pune. While persistent appreciation in prices is one of the prime reasons for slowdown in sales, a languishing IT sector has also cast a gloom on the pace of demand. The unit sales dropped 4.5% in Q4 FY12-13. Sales were fragmented across the city, however, four main pockets viz, Talegaon, Wagholi, Kondhwa and Chakan garnered about 30% of the city's sales. Hinjewadi and Wakad have seen major declines while Talegaon saw a sudden spurt in sales with 745 units in Q4 FY2012-13 compared to 373 units in the previous quarter.
East Kolkata saw the maximum sales on account of its connectivity to VIP Road, Arterial Road, Kaikhali Road and quality social infrastructure. Locations like Rajarhat, Barasat, Ruby Crossing and Maheshtala contributed 53% of the sales wherein Rajarhat in East Kolkata and Barasat in North Kolkata together grossed 40% of the entire city's sales.
Decline in new launches
According to Liases Foras, things on the new launch parameter also seemed dismal with the launches in terms of area dropping to the lowest level in two quarters. Q3 FY2012-13 saw the highest amount of new supply in the last 10 quarters, but the same trend did not rollover in the final quarter. However, the price trend remained the same wherein the prices of new launches were below that of existing supply. The price of new supply is 7% lower than the price of existing supply as of Q4 12-13.
NCR ruled the roost in terms of number of new launches, however, on a sequential basis the additions declined. MMR contributed 23% of the total supply in the country as compared to 12% in the previous quarter, followed by Chennai, which also saw increased new launches. Pune and Bengaluru remained stable while Hyderabad has shown significant shrinkage in new launches.
The Manmohan Singh government, which was so far gripped by policy paralysis on the economic front, is slowly stirring into some action as foreign investors have started to panic about the current account deficit and the falling rupee
The United Progressive Alliance (UPA) government, finally seems to have woken up to the reality of the worsening economic situation, made worse due to the falling rupee, rising current account deficit (CAD) and concerns over withdrawal of funds by foreign institutional investors (FIIs). While the Cabinet Committee on Economic Affairs (CCEA) came up with several measures, finance minister P Chidambaram tried to calm the nerves over the domestic currency that touched a lifetime low on Thursday.
The CCEA on Friday approved the proposal to replace highway developers, for both on-going and completed projects. This was a long-pending proposal from developers as well the National Highways Authority of India (NHAI) for allowing exit for cash-strapped developers. The developer can now be replaced by other with deeper pockets.
During FY2011-12, the NHAI and the ministry of highways awarded projects of 8,000km. However, the next year, the same figure came down sharply to 787km, a level last seen during the 2008-09 global slowdown. Even after repeated bids, many projects failed to get any response from developers.
In addition, large number of projects awarded during FY12 are yet to achieve financial closure. Developers are facing severe shortage of equity and consequently, as they are unable to raise required debt, there was poor response to public-private partnership (PPP) projects. To revitalise the sector, there is an imperative need for industry to raise fresh equity. Innovative ways of infusing equity was the need of the hour without compromising on due diligence and safeguarding public interest.
The decision to allow cash-strapped developers to exit from the project would allow entry of a financially healthier one instead of declaring the project a non-performing asset (NPA).
Speaking with reporters, finance minister P Chidambaram said, “We hope, with this, a number of stalled (road) projects, can now move forward.”
The CCEA also approved the proposal for the continuing the Restructured Accelerated Power Development and Reforms Programme (R-APDRP) in the XII Plan with minor changes to complete the ongoing or in pipeline projects in order to meet the objective and scope of the XI Plan R-APDRP. The programme size is Rs51,577 crore. Initially, the government and financial institutions would provide Rs50,000 crore. Out of the government’s grant of Rs31,577 crore, it has already released Rs5,697 crore, while Rs10,830 crore would be released during the 12th Plan.
The Cabinet Committee also cleared the proposal from the food ministry to offload 10 million tonnes (mt) of wheat and 0.5mt of rice from the godowns of Food Corporation of India (FCI). These foodgrain would be sold in the open market to control spiralling retail prices of wheat and rice. FCI has a stock of 77 mt of foodgrain against its storage capacity of around 74 mt.
The CCEA, which earlier this month had deferred a decision, on Friday cleared 5% stake sale in Neyveli Lignite (NLC), out of its holding of 93.56% through an offer for sale. This would help the government to garner about Rs466 crore, based on today's trading price of Rs59.8 per share of the company. The stake sale has become necessary following the August 2013 deadline given by market regulator Securities and Exchange Board of India (SEBI) to have a minimum 10% public shareholding in all public sector units (PSUs).
According to the Reserve Bank of India (RBI), the country’s macro-economic conditions remain weak. Growth concerns continue, due to a “soft patch” in the global economy and the continued slowdown in the domestic manufacturing sector. The recent drop in inflation is largely along the RBI’s expected lines and it expects the inflation outlook to be determined by minimum support prices, monsoon progress and rupee depreciation. On the external front, the RBI expects softer commodity prices and lower gold imports to moderate the current account deficit in FY14 (year ending March 2014), but financing the deficit remains a near-term challenge.
HDFC Life had refused to share all the reports except Cotinine for some policyholders under the argument that they had revised non-medical limits at the same time the customer took medical tests. It has now shared the report of another policy holder after Moneylife represented
Moneylife Insurance Helpline received the following email from Amit Kumar Mishra, “I am 31 years old. I went for Rs80 lakh term plan HDFC Life Click2Protect after cancelling the Rs75 lakh Click2Protect term plan under the condition that they will conduct a complete health check-up. In the hospital we went through several tests, but only the urine cotinine test details were available on insurer’s website. When I asked them why all details were not available, the manager said only the urine cotinine test was required and they did not collect all reports from the hospital. I have sent the reminders to the manager for uploading all the reports but still it has not been uploaded. My friend Uttam Dubey got the reports uploaded after the follow up and intervention from Moneylife helpline. Even after referring the case of Mr Dubey, HDFC Life has not uploaded the reports for me.”
It’s strange that same issue was reported by Uttam Dubey earlier. Moneylife intervention had helped to ensure HDFC Life share all the reports to Mr Dubey. In the case of Mr Mishra too, HDFC Life shared the report within one week of Moneylife taking up the issue. The insurer gave us the same argument about them revising non-medical limits at the same time the customer took medical tests.
Many customers of HDFC Life were made to undergo the tests but the reports never shared with them, because HDFC Life changed the non-medical limits at the same time. Here is the response from HDFC Life, which is identical in both the cases: “We keep revising our non-medical limits from time to time based on actual experience. Most of the times, we revise the non-medical limits and give the benefit of the revised limits to the proposals, which are pending for conversion. We had changed the non-medical limits just when Amit Kumar Mishra went for the medical examination. The centre had collected the samples and done the reports. However, as we had informed them of the revision in the non-medical limits, they only forwarded the Cotinine test report to us, on the basis of which we went ahead and converted the proposal. As the Cotinine test was the only medical test required for the conversion of Amit Kumar Mishra's policy because of the revision in non-medical limits, we had uploaded only that report. On receipt of the complaint, we have checked with the centre if they could produce the other reports, which they had retained at their end. We have now uploaded all the reports, which Amit Kumar Mishra can view at his end.”