EARLY SIGNS OF STABILITY

Residential markets are stabilizing in major parts of the country, while residential rentals are seeing corrections, says a report
The second quarter (April-June) of 2009 brought some stability in the residential markets across the major cities of India. Markets such as NCR, Kolkata, Chennai and Hyderabad remained largely stable while some micro markets in Mumbai registered marginal growth, says a report by Cushman & Wakefield.
The residential rental market on the other hand saw some correction in cities like Bangalore, Pune, Hyderabad as well as NCR, of which Bangalore witnessed the maximum drop in values ranging from 2-24 per cent across categories and locations. Hyderabad Kolkata and NCR witnessed marginal correction in rental values with a few micro markets also holding steady during the period. Mumbai and Chennai residential rental markets remained stable over the previous quarter.
Positive steps by the government in controlling lending rates, subsidies for low cost and affordable housing sector and general economic stability has led to a slow but steady revival of demand in the residential sector, especially from the end-user sector. With residential values eroded to levels as existed three-four years ago, most end-users have been viewing this as their best opportunity to enter the market. The developers' focus on 'affordable' or low-cost housing, too, is attracting the end-users.
However, there is still apprehension in terms of whether developers would be able to complete projects on time. Thus, only reputed developers have actually been able to take advantage of this development. In the interim, the secondary sales market has seen heightened activities where current owners are able to command reasonable prices, the report says.
Mumbai residential has seen a spike in demand as a result of which capital values have seen stability. There has been a rise in demand in the mid range segment, especially in the suburban locations, which has led to an increase in values in these locations. The high-end market has registered marginal correction however; it was not very profound as in the previous quarters.
Supply for new ready-to-move-in apartments has been constrained due to slowdown in construction activities while there is an improvement in demand.
The residential markets in NCR are likely to be at the trough with minor price adjustments anticipated in the short term. Renewed interests from end-users have been witnessed with the launch of several projects catering to the affordable segment in the suburban locations. Capital values are, however, likely to remain stable in the short term due to improved sentiment.
In Chennai, the capital values for the residential properties in the key residential locations have stabilized over the past few months.
This is mainly due to the launch of various projects by leading developers by offering discounted prices along with the regional players who have come up with several projects within the city limits. However, high-end developments in Boat Club and Poes Garden have proved to be exceptions in Chennai registering a minor correction in the range of 5-6 per cent. These locations are likely to correct further in the short term.
The property prices in Kolkata residential market across all categories exhibited no major fluctuations during July 2009.
High end segment in Ballygunge, Queens Park, Rainy Park, Gurusday Road, Alipore Park Rd, Ashoka Road, Belvedere Road and EM Bypass have already attained significant corrections. The market recorded interest from end-user driven segment in anticipation of a spurt in the property prices in the near future.
Courtesy:- HT Estates dt:- 19-09-09