New Delhi: Housing demand remained weak in the second half of 2013 due to high prices and steep interest rates coupled with slow economic growth, according to global property consultant CBRE.
“A slowing economic growth, coupled with high property prices and steep interest rates, resulted in weak demand for housing during the second half of 2013,” CBRE said in a statement.
In its bi-annual India Residential Market View report for H2 2013, CBRE said high vacancy level and rising construction cost led to a slowdown in construction activity, leading to a decline in new launches, and further delay in project completion timelines.
Commenting on the report, CBRE South Asia Chairman and Managing Director Anshuman Magazine said: “Home buyer sentiments remained cautious and subdued due to high price points, with preferences shifting to secondary and emerging micro-markets of leading cities.”
On the outlook, he felt that housing demand in the high-end and mid-end, as well as in the luxury segment, could remain sluggish across India’s leading cities during the first half of 2014, due to the subdued pre-election macro-economic environment.
The report said that liquidity issues and an increasing inventory caused developers to shift their focus from new launches to the completion of existing projects.
Still, the consultant said, the delays in project execution continued to remain an over-riding concern in most emerging housing markets.
“Developers reduced prices across select projects and offered discounts or marketing promotions to attract buyers in micro-markets with high inventory levels,” CBRE said.
While the premium housing segment saw a steady interest from high net worth individuals (HNIs) and non-resident Indians (NRIs), end-user demand in the high-end and mid-end segments remained low. The depreciating rupee resulted in an increase in NRI enquiries for property in India.
“The Delhi NCR witnessed capital appreciation across most micro-markets. Capital values in locations such as Sohna Road and MG Road in Gurgaon increased by 4–5 per cent owing to strong demand for high-end properties over the last review period,” CBRE said.
Mumbai’s housing market remained largely stable, with a slight appreciation in select premium micro-markets.
The exception was Central Mumbai, where values declined by 4–5 per cent, owing to sluggish demand, in comparison to the first half of 2013.