Southern real estate markets outperform North

Cities in south India have a better track record in project delivery, home sales and unsold inventory, with Bengaluru being the most reliable housing destination, said a new report by property research firm PropEquity.

The south dominated the top 10 ranking, with Bengaluru at the top, followed by Chennai and Hyderabad at third and fourth. Pune was second, while Gurgaon was the worst-performing market at 10th. The report is for January 2013 to December 2014.

All cities from the southern region had more than 75% project completion rate, over 80% absorption to supply ratio and average delays of between 14 and 16 months even in a slow market, said the report.

Realistic home prices, end-user driven demand, smaller projects, low land prices, project launches at completion stage or post construction and the large information technology industry were cited as the major factors driving the southern property market.

"Developers in the south are also not heavily dependent on cash flows from sales to fund the projects and manage their finances more efficiently," said Samir Jasuja, chief executive officer and founder, PropEquity.

The National Capital Region emerged as the worst performer with around 50% of the projects still under construction, taking more than twice the committed time.

"Developers in NCR have overstretched themselves by launching huge townships and large-sized projects, which were difficult to execute and required significant funding," Jasuja said.

All the five cities of NCR had inventory overhang of more than 50 months at the start of 2014, with Faridabad having the highest two-year average inventory overhang of more than 65 months. Bengaluru had the lowest overhang at the start of 2014, at 22 months, followed by Pune at 24 and Ahmedabad at 25 months.

Bengaluru also emerged as the biggest property market with Rs 36,000 crore of primary yearly sales in 2014, up 4% from a year earlier, followed by Mumbai at Rs 34,000 crore, down 13%.

NCR witnessed a 58% fall in market size to Rs 26,400 crore in 2014, followed by a 12% fall in the Mumbai Metropolitan Region (MMR). The south was the only resilient market, falling by just 2%.

Of the total 7,300 projects launched in 14 tracked cities between 2009 and 2011, around 30% of the total projects are still under construction.

Source: The Hindu Business Line,08 May ‘2015,New Delhi