Demand for houses declines in Q3
Mar 28, 2014
Source : The Times of India
 
 
DELHI: The slowdown in economy coupled with rise in interest rates and uncertain job prospects has hit the demand for real estate. In the third quarter of 2013-14, sales volumes declined 43% to 11.8 million sq ft from 21.9 million sq. ft in the same period last year, says a study by Knight Frank. Despite this, study says, the annual rise in prices of residential units in the last eight quarters is around 10%.

The on-going preparations for General Election of 2014 have further affected the liquidity in the system. A well-known builder confided that huge sums of black money of many political leaders are invested in the real estate market, which they take out at the time of elections to fund campaigns. "This time, as the market sentiment is not buoyant, such withdrawals from the system have affected the sector very badly."

According to the study, the decline in sales volumes is maximum in North Indian market followed by Western India, while the Southern Indian market witnessed a rise in sales. "Because of this, the market-share of South India based companies has gained the most during the past eight quarters." The real estate research firm Knight Frank carried out a study on 25 largest listed real estate companies.

"Huge debt burden led to the decline in sales volume of North India-based real estate companies, compelling them to change strategy. While reducing the frequency of new launches, they focused more on the completion of on-going projects and sold non-core assets in order to reduce debt." According to the report, the sales volumes in the third quarter of 2013-14 declined by 57% on y-o-y basis to only 5.98 sq ft as against 14 million sq ft.

However, sales volumes remained stable in southern market. According to the report, riding on affordable offerings, the sales volumes increased by 4% to 3.9 million sq ft in October-December quarter of 2013 as against 3.8 million sq ft in the same period last year.

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