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India Equity Research Reports, IPO and Stock News
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High level of absorption witnessed in Bengaluru; unlike other cities where it is seeing downtrend
Mumbai with the danger of sharp increase in inventory on the back of several new launches is poised for
property price correction
In NCR, Gurgaon and Noida are stronger markets compared to Greater Noida which has high level of
inventory and slow pace of absorption
Bengaluru continues to be the strongest property market in India; high level of absorption is the key to
avoid price correction
New Delhi has very low inventory; marginally above 2msf, no price correction expected
New launches have declined across the markets excluding Bengaluru
Absorption in Pune is following Mumbai property market trend; price correction expected unless the pace
of newlaunches remain slow
Reasonable absorption level and the slower pace of new launches will help Chennai property prices to
stabilise at the current levels
City-wise analysis
Absorption in NCR at 10msf has reduced considerably from 15-20msf witnessed six months back. However, it is significantly higher than the lows of
3-5msf attained in 2008-09.
The dearth of investor demand has pushed new launches to as low as 8msf, compared to 20-25msf a year back. We do not see any possibilities of this
demand coming back in the next six months primarily owing to high property prices and the uncertain economic scenario which will in turn keep a check on
NCR
months, new launches.
The inventory level at 132msf is higher than other cities; however, it has come down from the peak of 150msf in 2010, due to the slower pace of newer
launches. Inventory in months of sales at 12 is higher than the two years average of 9, which is a concern.
In nutshell, inventory level at 132msf is high and in months of sales. It is at 12, higher than the two years average of 9 months. However, a micro analysis
suggests that the Gurgaon and Noida markets are well placed with just seven months of sales each. New Delhi has an inventory as low as 2.3msf and being
land scarce region, doesn’t have pressure on price. Greater Noida has seen new launches at an aggressive pace, but without adequate absorption. We
believe Greater Noida is set to witness sharp price correction, which is unlikely for Gurgaon, Noida and New Delhi.
Absorption has been declining since November 2010; absorption at 6msf is at its 25-month low.
Mumbai
New launches at 4.5msf less than half on YoY basis; however, launches can jump up sharply, if the approvals are back on track.
Even though new launches have reduced considerably, the reducing absorption level has kept inventory levels at 99msf. The inventory in months of sales
is 16 doubled from 8 in September 2010. Though the inventory level has not increased since the past 20 months, considering large number of projects
awaiting approvals, this figure can go up sharply. This is not a good sign for Mumbai property prices.
In nutshell inventory level is currently at a manageable level; however several projects nutshell, however, are awaiting approvals for launch. In case the approval process
fastens, there will be a sudden rise in the inventory, which will push the developers to reduce the property prices. The saviour is considerable improvement
in absorption, which seems unlikely at the current property price levels.
City-wise analysis Cont.
Absorption in Bengaluru remains healthy; average for the past one-year is more than 6msf per month.
New launches were the least in past one-year. 4msf of new launches compared to monthly average of 7msf for the past one-year.
Inventory level maintained at 80msf, high but not alarming. Inventory level in months of sales is at 15, within the range of 13-15 for past 12 months.
Bengaluru
y , g g y , g p
In nutshell, even after series of launches, high absorption has helped inventory level to keep in check. While absorption at ongoing rate and slower pace of
new launches can keep the prices stable or help them to rise, a weak quarter in terms of absorption can push the inventory level higher and result in price
correction.
Absorption in Pune seems to follow absorption trend in Mumbai. Absorption in October 2011 is 3msf; at 23 months low.
New launches have declined considerably since beginning of the current calendar year. From the peak of 8msf in January, it has come down to as low as
2msf.
Pune
Inventory level declined from 61msf in January 2011 to 48msf in October 2011. This is not due to high demand but due of lack of new launches. The
inventory in months of sales has started rising back. From the low of 11 in June, it has risen to 15.
In nutshell, Pune seems to follow Mumbai real estate market and we believe it is facing the same problem of possibility of sharp jump in new launches. The
market may witness property price correction unless developers time their launches in such a manner that not many properties hit the market at the same
time (this is unlikely scenario as scenario, most of the developers are keen to monetise their assets at the earliest).
Absorption in Chennai has come down to 3msf from 5msf six months back; however, it is still much above the level of 1-1.5msf it witnessed two years ago.
Absorption in October was at a respectable level of 3msf, considering the city’s appetite.
Chennai
New launches have reduced considerably due to lack of approvals from government authorities. Launches in the past three months together were as low
as 5msf, which is lower than the average monthly launch a few months back.
The slower pace of new launches and reasonable absorption levels have reduced the inventory level to 32msf from 41msf six months back. Inventory in
months of sales is also at a manageable level of 12.
In nutshell, the city is well placed compared to most other metros in the country. Slower pace of newlaunches combined with reasonabledemand has
managed the property prices to stabilise at current levels and we don’t see possibilities of significant property price correction here.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
High level of absorption witnessed in Bengaluru; unlike other cities where it is seeing downtrend
Mumbai with the danger of sharp increase in inventory on the back of several new launches is poised for
property price correction
In NCR, Gurgaon and Noida are stronger markets compared to Greater Noida which has high level of
inventory and slow pace of absorption
Bengaluru continues to be the strongest property market in India; high level of absorption is the key to
avoid price correction
New Delhi has very low inventory; marginally above 2msf, no price correction expected
New launches have declined across the markets excluding Bengaluru
Absorption in Pune is following Mumbai property market trend; price correction expected unless the pace
of newlaunches remain slow
Reasonable absorption level and the slower pace of new launches will help Chennai property prices to
stabilise at the current levels
City-wise analysis
Absorption in NCR at 10msf has reduced considerably from 15-20msf witnessed six months back. However, it is significantly higher than the lows of
3-5msf attained in 2008-09.
The dearth of investor demand has pushed new launches to as low as 8msf, compared to 20-25msf a year back. We do not see any possibilities of this
demand coming back in the next six months primarily owing to high property prices and the uncertain economic scenario which will in turn keep a check on
NCR
months, new launches.
The inventory level at 132msf is higher than other cities; however, it has come down from the peak of 150msf in 2010, due to the slower pace of newer
launches. Inventory in months of sales at 12 is higher than the two years average of 9, which is a concern.
In nutshell, inventory level at 132msf is high and in months of sales. It is at 12, higher than the two years average of 9 months. However, a micro analysis
suggests that the Gurgaon and Noida markets are well placed with just seven months of sales each. New Delhi has an inventory as low as 2.3msf and being
land scarce region, doesn’t have pressure on price. Greater Noida has seen new launches at an aggressive pace, but without adequate absorption. We
believe Greater Noida is set to witness sharp price correction, which is unlikely for Gurgaon, Noida and New Delhi.
Absorption has been declining since November 2010; absorption at 6msf is at its 25-month low.
Mumbai
New launches at 4.5msf less than half on YoY basis; however, launches can jump up sharply, if the approvals are back on track.
Even though new launches have reduced considerably, the reducing absorption level has kept inventory levels at 99msf. The inventory in months of sales
is 16 doubled from 8 in September 2010. Though the inventory level has not increased since the past 20 months, considering large number of projects
awaiting approvals, this figure can go up sharply. This is not a good sign for Mumbai property prices.
In nutshell inventory level is currently at a manageable level; however several projects nutshell, however, are awaiting approvals for launch. In case the approval process
fastens, there will be a sudden rise in the inventory, which will push the developers to reduce the property prices. The saviour is considerable improvement
in absorption, which seems unlikely at the current property price levels.
City-wise analysis Cont.
Absorption in Bengaluru remains healthy; average for the past one-year is more than 6msf per month.
New launches were the least in past one-year. 4msf of new launches compared to monthly average of 7msf for the past one-year.
Inventory level maintained at 80msf, high but not alarming. Inventory level in months of sales is at 15, within the range of 13-15 for past 12 months.
Bengaluru
y , g g y , g p
In nutshell, even after series of launches, high absorption has helped inventory level to keep in check. While absorption at ongoing rate and slower pace of
new launches can keep the prices stable or help them to rise, a weak quarter in terms of absorption can push the inventory level higher and result in price
correction.
Absorption in Pune seems to follow absorption trend in Mumbai. Absorption in October 2011 is 3msf; at 23 months low.
New launches have declined considerably since beginning of the current calendar year. From the peak of 8msf in January, it has come down to as low as
2msf.
Pune
Inventory level declined from 61msf in January 2011 to 48msf in October 2011. This is not due to high demand but due of lack of new launches. The
inventory in months of sales has started rising back. From the low of 11 in June, it has risen to 15.
In nutshell, Pune seems to follow Mumbai real estate market and we believe it is facing the same problem of possibility of sharp jump in new launches. The
market may witness property price correction unless developers time their launches in such a manner that not many properties hit the market at the same
time (this is unlikely scenario as scenario, most of the developers are keen to monetise their assets at the earliest).
Absorption in Chennai has come down to 3msf from 5msf six months back; however, it is still much above the level of 1-1.5msf it witnessed two years ago.
Absorption in October was at a respectable level of 3msf, considering the city’s appetite.
Chennai
New launches have reduced considerably due to lack of approvals from government authorities. Launches in the past three months together were as low
as 5msf, which is lower than the average monthly launch a few months back.
The slower pace of new launches and reasonable absorption levels have reduced the inventory level to 32msf from 41msf six months back. Inventory in
months of sales is also at a manageable level of 12.
In nutshell, the city is well placed compared to most other metros in the country. Slower pace of newlaunches combined with reasonabledemand has
managed the property prices to stabilise at current levels and we don’t see possibilities of significant property price correction here.
Many people are moving towards for a perfect location and Noida and Greater Noida is the best place to do the same thing.
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