NEW DELHI: After a lacklustre first half, home sales across the top six cities in the country are expected to rise 26 per cent in the second half of 2014 compared to a year ago, according to a research report by property advisory firm Knight Frank.
A negative sentiment among home buyers due to the slow economy, high interest rates, inflation and also political uncertainty had tempered home sales in the first half of the year. While new launches in the period dropped 32 per cent, sales volume was down 27 per cent.
But now, with a positive election result, a stable government at the centre and sops for the housing sector in the interim budget and other measures to shore up the economy by the new government, there are signs that the tide might be turning.
Mumbai and Bangalore are expected to lead the recovery in sales volume with 49 per cent and 26 per cent growth respectively in the second half of the current year, says the half yearly report by Knight Frank.
New, launches, though, are expected to rise only 5 per cent in the next six months as developers may like to focus on getting rid of their large inventory of unsold homes that has piled up over the quarters.
The national capital region (NCR) saw a drastic drop of 37 per cent in home sales in the first six months of the year to nearly 28,500 units compared to 45,300 units a year ago. Launches of new homes too fell by 43 per cent at 35,500 units during the period but despite the lower number of launches, there were 167,000 unsold units in the NCR market in June which would take at least two years to be sold.
"The government's intention to revive economy growth of the country seems to have stuck the right cord among investors and we do notice a substantial change in sentiments for the better," said Shishir Baijal, chairman and managing director of Knight Frank.
Demand for homes in Mumbai, said Knight Frank, dropped by 25 per cent in the first half of 2014 compared to a year ago whole new launches were down 38 per cent. The Mumbai Metropolitan Region has an unsold inventory level of 213,742 units which would take about three years to sell.
The report, however, expects an uptick in the Mumbai property market with four important infrastructure projects coming up in the city including the part-opening of a monorail system, the commissioning of Metro Rail and the Eastern Freeway.
Bangalore as a market has seen healthy demand for homes despite the slowdown however the momentum has somewhat slackened in 2014, said Knight Frank.
In contract with the housing market, the office market has seen an improvement in its fortunes. Vacancy levels have come feom from 21 per cent in the second half of 2012 to 19 per cent in the first half of 2014. The combined absorption of office space in the top six cities has increased from 14.7 million sq ft in the second half of 2012 to 17.9 million sq ft in the half just ended.
Knight Frank forecasts that this will increase to 18.7 million sq ft in the second half of 2014. "For the full year 2014, we expect absorption to touch 36.5 million sq ft, a jump of 8 per cent from the 33.9 million sq ft reported in 2013," the report said.