While the residential sector witnessed the maximum deals this year, private equity investment in the sector dried up, an indication of the overall negative sentiment plaguing the economy.
According to the report, the negative sentiment of 2012 may get carried forward into the first quarter of the next financial year, though the Real Estate Regulation Bill and the Land Acquisition Bill may help the sector revive thereafter.
The report takes a look at 10 markets that are likely to do well:
- Gurgaon: Golf Course Extension and Dwarka Expressway have emerged as lucrative markets, the report says. Most projects in Golf Course Extension are in advanced stages of construction, and the region is “pegged to be the next established market with good livability”. Dwarka Expressway has seen around 2,400 units launched every month, and is emerging a favourite for investors, the report adds. Since 2009, Gurgaon has seen consistent supply growth of around 30 per cent. The market has given 12.5 per cent CAGR returns since 2009.
- Noida: Sectors 70,74,75,76,77,78,79,113,117,118,119,120 and 121 are the new upcoming areas in the region, and more than 53,000 units are scheduled to get completed during 2013-15, says the report. However, investors are advised to do a thorough check since cases pertaining to improper land acquisition may lead to long delays in the execution of some projects. During 2009-12, the overall supply in Noida market has multiplied by 3.44 times. The satellite town, however, has seen a steep fall in fresh launches as the demand fell short of fresh supply, leading to pressure on the developers. Since 2009, the Noida market has given a decent CAGR return of 7.8 per cent.
- Ghaziabad: The Vasundhara, Indirapuram and Vaishali cluster has a good mix of ready and under-construction units. Around 13,000 flats are expected to get completed during 2013-15. Good infrastructure and proximity to Delhi as well as the commercial sectors of Noida are a big advantage. “NH-24 has emerged as an affordable market with a sedate supply,” says the report. Around 2,440 units are expected to be completed by 2015. Raj Nagar Extension, on the other hand, has under-construction stock of over 23,000 units. Ghaziabad has seen a decent 22 per cent growth in supply during 2009-12. The highest growth of 30 per cent (year-on-year) was seen in 2011. Overall, Ghaziabad has given only 8.2 per cent CAGR returns from a low base.
- Faridabad: The region is seeing relatively slow project execution and most projects are in advanced stages of completion. Construction on arterial roads could see a surge in new projects. Faridabad has seen a decent 17 per cent growth in supply during 2009-12. The highest growth of 11 per cent (y-o-y) was seen in 2010. The market has seen 60 per cent rise in new launches, albeit from a lower base. Since 2009, the Faridabad market has given a 10 per cent CAGR returns.
- Mumbai: Areas such as Wadala are still coming at much cheaper rates of Rs 16,000 per square feet compared to the average market price of Rs 25,000 per square feet. Most of the under-construction stock is likely to be completed by 2015. Supply in Mumbai saw the highest growth in 2010, and growth has plateaued since then. There has also been a pile up of inventory in the market. Mumbai has witnessed an average 20-23 per cent of unsold stock in the last four years.
- Thane: Ghodbunder Road and Kalyan Dombivil are key markets to watch out for, the report says. Prices here have been rising consistently at 26 per cent CAGR in the last two years and six months. Thane has witnessed an average 20-30 per cent of unsold stock in the last four years. In Navi Mumbai, Ulwe is an attractive emerging market where most of the under-construction stock is likely to be completed by 2013-14. Navi Mumbai, too, has witnessed an average 25-30 per cent of unsold stock in the last four years.
- Pune: It is a stable market where the inventory overhang has remained constant even with an increase in supply. In 2011, supply saw the highest growth at 28 per cent, followed by 26 per cent in 2010. The market has, on an average, seen prices appreciate 9 per cent year-on-year since 2010. Hinjewadi is emerging as an attractive market where major IT companies are opening up. More than 60 per cent of under construction flats are sold out.
- Hyderabad: A high inventory overhang is a concern for Gachibowli. However, employment opportunities in the nearby areas are a positive. The Kukatpally region, on the other hand, is an attractive market that has seen a steady price appreciation. The HITECH City in close proximity is also likely to drive future demand. Hyderabad has witnessed an average 25-37 per cent of unsold stock in the last four years.
- Chennai: Old Mahabalipuram Road and GST Road are emerging locations in the city and have significant under-construction stock by good developers. Supply was the highest in 2011. The city has witnessed an average 22-33 per cent of unsold stock in the last four years. The market has witnessed a 36 per cent fall in new launches.
- Bangalore: Supply has seen the highest growth since 2011. There has also been a pile-up of inventory, indicating to a slowdown in sales in the market. The city has seen an average 20-23 per cent of unsold stock in the last four years. The market has witnessed a 28 per cent fall in new launches.