50% Slump in Residential Projects Launches in Q1 of 2015

April 24, 2015 - PRLog -- The residential sector in India has experienced a major demise in the Q1 of 2015 the lowest ever to about 50%, as the developers are largely inclined to finishing their existing projects while drifting from the new launches. While the new launches in the Q1 of 2014 was 55,500 units, the dropping statistics are significant as the new launches this year has fallen to 24,700 units.

The major reason behind the significant change in the decision of the developers has resulted in response to the present scenario of the dropping sales margin in the residential sector below expectations. At present, the developers are prioritizing their efforts on completing the existing projects. It is quite likely that they will remain aloof from the new project launches and raise their decisions as the new regulations take its effect. The only significant growth in the residential sector project launches are credited to the large builders rolling out new development plans in some key cities in India.

The momentous considerable aspect in this context is the financial jeopardy of the developers as many are mending efforts to explore possibilities of managing debt settlement with low interest rate options. Their prime focus is on draw private equity capital as a measure to take control of the financial liabilities.

Chalking out the possible reasons of the present scenario, the experts opine that the prime matter of consideration for the developers is their over allocation into the present projects that poses hindrance to raising more capital against their construction project capabilities or land bank.

Impact of Slashed of New Launches

The significant YoY growth of 26% in the new launches is limited to the registration of high-end segments in prominent Indian cities. The effect of the present circumstances will affect the buyers in the low-income group, as there has been a reduction of over 80% in the new launch of affordable housing sector units. The most serious impact evident until date is the postponement of the Mumbai Development Plan 2034, which expected to result in delaying of the new launches to cause shortage in the housing stocks.

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