Launches in the first half of 2019 were estimated at 43,822, up by 22 percent from 35,874 in the first half of 2018. Housing units sold saw an increase of 4% from H1 2019 (33,731) from H1 2018 (32,412).
Although property launches showed a growth of 22 percent, they had dwarfed from that of the last year. The growth recorded in the first half of 2018 (compared from corresponding period of 2017) was 220 percent year on year.
Elaborating on the trends, the agency said,
• 62% of launches during H1 2019 were in sub-INR 7.5 million (Rs 75 lakhs) ticket size and 82% were below INR 10 million (Rs 1 crore) ticket size.
• Thane market witnessed the largest quantum of new launches on account of new projects launched by some of the country's biggest corporates.
• Peripheral Central Suburbs witnessed the highest sales growth in MMR of 9% YoY during H1 2019 followed by Thane at 7% YoY.
• Affordable houses continued to drive sales in H1 2019, relatively affordable markets of MMR – Thane, Peripheral Central Suburbs and Peripheral Western Suburbs combined, grew by 6% YoY during H1 2019. However, sales in the pricier BMC markets grew only by 3% YoY in the same period.
• On account of launches being higher than the sales, the unsold inventory levels in MMR have inched up 14% YoY to 136,525 units during H1 2019.
• Quarters-to sell (QTS) for the MMR market went up from 8 quarters in H1 2018 to 8.5 quarters in H1 2019. The current QTS of 8.5 quarters should not be interpreted as a sign of a healthy market. Over the past few years, in MMR, launches have constantly surpassed sales since H2 2014 till H1 2017.
• The weighted average price for MMR was down 3% YoY during H1 2019. The prices have corrected by 12% from the peak of H2 2016.
• Host of indirect offers and freebees remain in the market, they include: no floor rise, no stamp duty, 2 years maintenance free period, no club house charges, 2 years assured rentals schemes, various subvention schemes, deferred payment plans, etc.
• Earlier subvention schemes and deferred payment plans were available only in under-construction projects, but now it is available in few OC ready projects as well.
• Unprecedented investment in infrastructure in Mumbai. Over INR 2 trillion or INR 2 lakh crore being invested. Metro projects worth INR 1.16 trillion or INR 1.16 lakh crore under-construction.
The study lists "two major events - GST ambiguity and election uncertainty," as responsible for tepid sales.
"GST change has failed to enthuse homebuyers; most developers have opted for earlier GST regime for 12% with ITC for on-going projects," a note from the agency detailed.
It also elaborated further that the RBI's several cuts on interest rates are yet to be completely passed to home-buyers. "Banks have passed on only 10-30 bps (0.10 - 0.30 percent) out of the 75-bps (0.75 percent) cut by RBI in 2019," it said.
"The liquidity crisis in the NBFC sector, which struck during H2 2018, is still casting its shadow on the MMR market and cost of funds have gone up for developers to the tune of 180–250 bps," added the agency.
Gulam Zia, Executive Director for Valuation & Advisory Retail & Hospitality at the agency said, "The mood of residential realty in Mumbai continues to be sombre and withdrawn. With more skeletons tumbling out of NBFC cupboards the shadows on Indian housing industry are getting longer. The respite offered in the finance bill may still not be able adequate to pull the sector out of its current situation. to rescue a few more developers who’re already on the brink of an imminent collapse. Affordable housing segment has emerged as a silver lining in these dark clouds. The finance minister has announced more sops for this segment to step closer to the dream of “housing for all”. The developers who desire to remain relevant after this catastrophic period of downturn will have to recalibrate their business models and focus on creating more affordable homes."
As part of its annual report on the property market, the agency revealed trends for both residential as well as office market performance for eight cities for the period January – June 2019 (H1 2019).
On the office market trends, Knight Frank, reported transaction activity in Mumbai Metropolitan Region (MMR) of?ce market as strong at 0.43 million sq m (4.6 mn sq ft) in H1 2019, registering a growth of 61% YoY. "In H1 2019, new completions dropped by 56% year-on-year (YoY) at 0.18 mn sq m (1.9 mn sq ft)," the note added.