In association with

Realty launches down 30% in 2012 as bank credit dries up

Higher mortgage rates and slowdown in bank credit resulted in a 30 percent decline in real estate launches in 2012 against a decline of 7 percent in 2011, said a report by property research firm Knight Frank.

"Developers are cautious of launching projects as the gap between the launch and the absorption numbers reduced to 32,000 units in 2012 compared to 82,000 and 94,000 units in 2010 and 2011 respectively," said Samanthak Das, Director, Research and Advisory Services, Knight Frank India.


Residential sales in the top six cities ( NCR and Mumbai accounted for almost 60% of the total absorption among the top 6 cities, where NCR saw the highest absorption at 37%, and Mumbai 23%, followed by Bengaluru at 13%, Pune at 11%, Chennai 9% and Hyderabad 7% ) fell 16 percent in 2012 against 14 percent in 2011 due to high property prices.

Banks' credit exposure to developers has also fallen from its peak growth rate of 23.21 percent in June 2011 to 3.88 percent in September 2012.

Among the top-6 cities, the NCR led the residential market in terms of absorption as well as launches

According to the report,increase in supply in NCR will primarily emanate from the opening up of new sectors in Gurgaon Noida and Greater Noida. "However, controlled new supply will keep a check on the quantum of unsold inventory. As a result we expect the NCR residential market to stabilize in 2013," said Das.

Mumbai on the other hand continues to suffer from declining sales volume but rising property prices and a stagnating job market. "Price growth in Mumbai will be muted on account of unsold inventory and increasing share of peripheral markets."

Bangalore, which is an end user market, is likely to see a steady supply of new houses with stable absorption, while Pune is expected to see maximum traction in the residential space. "A comparatively higher number of unsold units in 2012 will ensure a marginal drop in new launches for the next year. Additionally, the prices will also stagnate as the supply overhang decreases," said Das.

Published Date: Jan 08, 2013 15:33 PM | Updated Date: Dec 20, 2014 15:08 PM

Also See