NEW DELHI: Real estate developers have cut back sharply on new project launches, preferring instead to first try and sell pricier unsold inventory and, in the process, also prevent prices from collapsing in a sagging market.
Analysts tracking the property market say developers across India have realised that launching new projects could put pressure on pricing in a market already saddled with inventory. "If they launch at a lower price today, their existing unsold inventory will get hit," says Vineet Chandak, real estate analyst with IDFC Securities. Property prices rose sharply in the last one year even though sales volumes fell more than 50%, hit by double-digit interest rates, high property prices and an overall economic slowdown.
Research and analytics firm PropEquity estimates that residential project launches in key centers such as Delhi-NCR, Mumbai and Bangalore have dropped by 30-50% in a year. The firm estimates that new residential project launches fell 49% year-on-year in the Delhi NCR region in the January-March quarter, outpacing a 31% drop in the Mumbai Metropolitan Region. The numbers for Bangalore, Chennai, Pune and Hyderabad stood at 45%, 42%, 44% and 77% respectively. "Developers across the country are delaying project launches to maintain pricing and clearing their unsold inventory that was launched at higher prices," says Samir Jasuja, chief executive officer at PropEquity.
Developers, many of whom managed to increase prices in the last year to pass on increased costs of steel, cement and labour, also concede that new launches are being delayed.
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Source:economictimes.indiatimes.com
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