Realty Decoded Q2 FY 18 DecodedQ2 FY18.pdf · Residential Trends in top-9 cities* Q-o-Q Notes: *...

Realty Decoded– Q2 FY’18October 2017

1Source: PropTiger DataLabs Sep’17

Executive Summary

• Q2 FY’18 was the first full quarter in the new RERA and GST regime and as expected both new launches and sales struggled in this quarter. On a year on year basis

- New launches dropped by 53% over Q2 FY’17- Sales dropped by 18% over Q2 FY’17- Inventory overhang increased to 42 months from 35 months in Q2 FY’17

• Amongst the top 9 cities only Mumbai and Gurugram had shown improvement in both new launches and sales. Market in Gurugram was driven by affordable housing under Haryana Affordable Housing Policy 2013 and market in Mumbai benefited out of early implementation of RERA

• Sales showed a marked improvement in September over July and August, driven by festival offers launched by most developers. Festival offers worked very well in Mumbai, Pune and Bangalore but could not yield similar results in Noida, Chennai and Hyderabad

• Though overall sales dropped by 18%, ready to move in units sales have consistently grown at 21% annual rate whereas sales of under-construction units have de-grown at 22% annual rate over last 4 years. Even in under-construction units, sales of older projects have been better than newly launched

• Ahmedabad and Chennai have highest share of ready to move in units in unsold stock• Units which were priced in the budget of <50 Lakhs contributed > 50% in new launches as well as in sales• Average prices are finally sloping upwards in Gurgaon, Mumbai and Hyderabad after a long stagnation


Residential Landscape: Top-9 cities as of Q2 FY’18

Notes: 1. Y-o-Y is comparison between the corresponding quarter of the previous year and the current quarter2. BSP is represented in Rs./sq.ft. 3. Inventory overhang is represented in months.

Pune and Noida witnessed steep increase in launches over the previous quarter. Except Gurgaon which saw few big affordable housing allotment, all other cities have seen decline in sales.

Y-o-Y (%)

Launches -91%

Sales -46%

BSP 2%(2,960)

Inventory Overhang

-72%(50)

AHMEDABAD BENGALURU Y-o-Y (%)

Launches -58%

Sales -27%

BSP 2%(4,926)

Inventory Overhang

-19%(37)

Y-o-Y (%)

Launches -91%

Sales -23%

BSP 1%(5,052)

Inventory Overhang

-58%(40)

CHENNAI

Y-o-Y (%)

Launches 85%

Sales +60%

BSP 9%(6,024)

Inventory Overhang

47%(35)

GURUGRAM Y-o-Y (%)

Launches -89%

Sales -18%

BSP 4%(4,132)

Inventory Overhang

-39%(29)

HYDERABAD Y-o-Y (%)

Launches -92%

Sales -21%

BSP -1%(3,831)

Inventory Overhang

-26%(39)

KOLKATA

MUMBAI Y-o-Y (%)

Launches 19%

Sales 6%

BSP 4%(8,672)

Inventory Overhang

-26%(54)

NOIDA Y-o-Y (%)

Launches -51%

Sales -29%

BSP -2%(3,896)

Inventory Overhang

-26%(68)

Y-o-Y (%)

Launches -37%

Sales -32%

BSP 1%(4,952)

Inventory Overhang

-96%(45)

PUNE


Despite festival season, most key parameters were in red

Launches

Sales

Inventory Overhang

Q2 FY’17 Q4 FY’17 Q1 FY’18 Q2 FY’18Q3 FY’17

Price Trend

14% -8%

-1% -16%

0% 0%

0% 23%

Residential Trends in top-9 cities* Q-o-Q

Notes: * Top 9 Cities are Mumbai (including Navi Mumbai & Thane), Pune, Noida (including Greater Noida & Yamuna Expressway), Gurugram (including Bhiwadi, Dharuhera & Sohna), Bengaluru, Chennai, Hyderabad, Kolkata and Ahmedabad.

Analysis includes apartments and villas across the regions.

Strong/Marginal Decline

Stable

Strong/Marginal Increase

/

/

19%

13%

-1%

-16%

-43%

3%

1%

-5%

-25%

-16%

13%

2%


1…………... Launches:

RERA Continued To

Impair Launches


75,35779,343 73,433

50,594

36,774

42,26936,275

41,31347,032 43,253

51,521

29,60622,115

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

Q2 FY'15

Q3 FY'15

Q4 FY'15

Q1 FY'16

Q2 FY'16

Q3 FY'16

Q4FY'16

Q1 FY'17

Q2 FY'17

Q3 FY'17

Q4 FY'17

Q1 FY'18

Q2 FY'18

Total number of launches in top-9 cities*

Launches continued to be impacted by RERA and were 53% lower than Q2 FY’17

# of units



- 53%


6,75

2

5,64

7

4,19

2

1,33

1 3,49

2

8,02

7

8,08

4

2,19

2

7,31

5

581 2,

363

381

2,46

0

383

675

9,58

4

1,08

4

4,60

4

0

5,000

10,000

15,000

20,000

Ahmedabad Bengaluru Chennai Gurugram^ Hyderabad Kolkata Mumbai** Noida* Pune

Total unit launches – Q2 FY’17 vs Q2 FY’18 Q2 FY'17Q2 FY'18

Except Mumbai & Gurugram, decline in launches was consistent across cities

# of units

Notes: * Noida includes Greater Noida and Yamuna Expressway.** Mumbai includes Navi Mumbai and Thane.^ Gurugram includes Bhiwadi, Dharuhera and Sohna.Analysis includes apartments and villas across the regions.


20% 22% 23% 20% 16% 14% 18% 20% 23% 24%40%

20% 25%

36% 30% 35%33% 41%

32% 27%33%

38% 36%

27%

29%31%

19% 23% 16% 25% 21%

17% 24%21%

17% 19%16%

27% 16%

10% 8% 8% 8% 10%

12%11%

8%9% 9%

8%11%

8%

15% 17% 18% 14% 12%25% 20% 18% 13% 12% 9% 13%

20%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q2FY'15

Q3FY'15

Q4FY'15

Q1FY'16

Q2FY'16

Q3FY'16

Q4FY'16

Q1FY'17

Q2FY'17

Q3FY'17

Q4FY'17

Q1FY'18

Q2FY'18

Q-o-Q budget-wise unit launches in top-9* cities

< Rs.25 Lakhs Rs.25-50 Lakhs Rs.50-75 Lakhs Rs.75-100 Lakhs > Rs.1 Crore

After decline in Q1 FY’18, share of affordable housing again crossed 50% mark in Q2 FY’18

% of units




2……Consumer & Demand :

Sales Momentum Subdued


80,36676,739

65,78957,245

48,97653,457 51,550

55,500 54,721

43,512

51,715 53,352

44,755

0

30,000

60,000

90,000

Q2FY'15

Q3FY'15

Q4FY'15

Q1FY'16

Q2FY'16

Q3FY'16

Q4FY'16

Q1FY'17

Q2FY'17

Q3FY'17

Q4FY'17

Q1FY'18

Q2FY'18

Sales trend in top-9 cities*

Sales declined by 18% over the Q2 FY’17 primarily due to slow RERA registration

# of units



-18%


4,12

8

9,55

7

3,84

9

2,09

0 4,10

5

3,77

8

11,4

62

5,10

4

10,6

48

2,22

2

6,97

6

2,94

5

3,34

2

3,35

6

2,99

3

12,1

01

3,60

6

7,21

4

0

5,000

10,000

15,000

20,000


Total unit Sales – Q2 FY’17 vs Q2 FY’18 Q2 FY'17Q2 FY'18

Only Gurugram and Mumbai have shown improvement in sales compared to other cities

# of units



9,050 8,762 9,170 9,756 11,495 15,065 17,135 16,750 19,399

2,23,498

1,99,179

1,63,497 1,58,1131,39,719 1,39,025

1,19,217

94,04384,408

0

50,000

1,00,000

1,50,000

2,00,000

2,50,000

H1 FY'14 H2 FY'14 H1 FY'15 H2 FY'15 H1 FY'16 H2 FY'16 H1 FY'17 H2 FY'17 H1 FY'18

Sales in top-9* cities: Completed vs Under-Construction projects

Completed Under Construction

Sales of ready to move in units continued to grow unlike reduction in under-construction unit sales

# of units



21%

-22%

CAGR


Even in under-construction units, sales improved in older projects compared to newly launched projects

# of units



Period% Change

(H1FY’18-o-H2 FY’17)

Units sold in ≤ 6 months old projects -27%Units sold in 7-12 months old projects 16%Units sold in > 12 months old projects 14%

67,663

54,726

35,301 34,331 33,03927,877

20,440

29,888

19,57213,843 12,556 12,388 9,443 10,944

75,54068,230

57,077 58,12064,794

57,907

65,775

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

H1 FY'15 H2 FY'15 H1 FY'16 H2 FY'16 H1 FY'17 H2 FY'17 H1 FY'18

Sales in top-9* cities: New projects vs old projects

Units sold in ≤ 6 months old projects Units sold in 7-12 months old projects Units sold in > 12 months old projects


17% 18% 19% 17% 16% 17% 17% 17% 15% 17% 22% 18% 20%

39% 38% 37% 35% 36% 36% 35% 35% 36% 37%36%

36% 32%

20% 21% 19% 23% 21% 19% 20% 20% 21% 20% 18% 21% 20%

9% 8% 8% 9% 10% 9% 10% 10% 10% 9% 8% 9% 9%

15% 15% 17% 16% 17% 19% 18% 18% 18% 17% 16% 16% 19%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q2FY'15

Q3FY'15

Q4FY'15

Q1FY'16

Q2FY'16

Q3FY'16

Q4FY'16

Q1FY'17

Q2FY'17

Q3FY'17

Q4FY'17

Q1FY'18

Q2FY'18

Sales in top-9* cities by budget segment

< Rs.25 Lakhs Rs.25-50 Lakhs Rs.50-75 Lakhs Rs.75-100 Lakhs > Rs.1 Crore

< Rs. 50 Lakhs segment continued to play a larger role in sales

% of units




Gurugram tops the charts for sales in < Rs. 25 Lakhs during the quarter owing to successful affordable housing policy

28%

3%10%

61%

4%

25% 20% 17% 23%

37%

37%39%

7%

35%

42%

20%

47%43%

13%

30%22%

6%

30%

16%

17%

18%21%

7%11% 11% 7% 13%

7%

11%

7%7%15% 19% 18% 19% 18%

10%

32%

11% 6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%> Rs.1 Crore

Rs.75-100 Lakhs

Rs.50-75 Lakhs

Rs.25-50 Lakhs

< Rs.25 Lakhs

% of units Budget-wise Sales in top-9* cities – Q2 FY’18



3………Inventory:

Inventory Overhang Erodes


23 25

2933

3735

3835 35

46

3937

42

0

5

10

15

20

25

30

35

40

45

50

Q2FY'15

Q3FY'15

Q4FY'15

Q1FY'16

Q2FY'16

Q3FY'16

Q4FY'16

Q1FY'17

Q2FY'17

Q3FY'17

Q4FY'17

Q1FY'18

Q2FY'18

Q-o-Q overall inventory overhang in top-9* cities

Inventory overhang at the end of Q2 FY’18 increased to 42 months due to drop in sales during the quarter

# of months




Hyderabad & Gurugram have the lowest inventory overhang at the end of Q2 FY’18

AhmedabadBengaluru

ChennaiGurugram

Hyderabad Kolkata

Mumbai

Noida

Pune

20

25

30

35

40

45

50

55

25 30 35 40 45 50 55 60 65 70

Age of unsold inventory (months)

Age of unsold inventory vs inventory overhang in top-9* cities(Sep’17)

Inventory overhang (months)

Notes: Notes: * Top 9 Cities are Mumbai (including Navi Mumbai & Thane), Pune, Noida (including Greater Noida & Yamuna Expressway), Gurugram (including Bhiwadi, Dharuhera & Sohna), Bengaluru, Chennai, Hyderabad, Kolkata and Ahmedabad.

Analysis includes apartments and villas across the regions.Size of the bubble indicates total inventory in units.


20% 17% 17%22%

32% 29%21%

7%

26%

28%23%

17%14%

32%

20%

20%

13%

28%

20%

22%

17%18%

9%

20%

20%

11%

23%

32%38%

49% 46%

27% 31%39%

69%

23%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


> 3 Yrs

2 to 3 Yrs

1 to 2 Yrs

≤ 1 Yr

Noida holds the highest share of unsold inventory aged above 3 years followed by Chennai & Gurugram

% of inventory Age of unsold inventory in top-9 cities (Sep’17)



Kolkata and Ahmedabad have more than 70% of the unsold inventory in the <50 Lakhs segment followed by Pune

37%

6%12% 16%

3%

37%

23%11%

25%

34%

31%

39%21%

28%

35%

20%56%

41%

11%

29%

24%

17% 30%

15%

18%

19% 21%

6%

14%

11%

13%

18%

6%

9%

7% 6%12%

20%14%

33%

21%7%

30%

7% 7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

> Rs.1 Crore

Rs.75-100 Lakhs

Rs.50-75 Lakhs

Rs.25-50 Lakhs

< Rs.25 Lakhs

% of inventory Budget breakup of unsold inventory (Sep’17)



32%

16% 26

%

6% 12%

11%

6% 9% 7%

68%

84% 74

%

94% 88

%

89%

94%

91%

93%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Unsold Inventory as on Sep’17 – Completed Vs Under-Construction

Completed Under Construction

Ahmedabad and Chennai have highest share of ready to move in units in unsold inventory


% of inventory


4…………………Pricing:

Positive Changes


Gurugram witnessed highest price appreciation followed by Mumbai and Hyderabad

Weighted average^^ BSP (Rs./sq.ft.) of apartment units as at the end of quarter

City Q2 FY’17 Q2 FY’18 Price Change(Y-o-Y)

Ahmedabad 2,912 2,960 2%

Bengaluru 4,811 4,926 2%

Chennai 4,998 5,052 1%

Gurugram^ 5,525 6,024 9%

Hyderabad 3,991 4,132 4%

Kolkata 3,879 3,831 -1%

Mumbai** 8,349 8,672 4%

Noida* 3,987 3,896 -2%

Pune 4,891 4,952 1%

Notes: ^^ Price weighted on number of units supply in respective projects in a city.* Noida includes Greater Noida and Yamuna Expressway.** Mumbai includes Navi Mumbai and Thane.^ Gurugram includes Bhiwadi, Dharuhera and Sohna.Analysis includes apartments across the regions.


Gurugram witnessed a sudden jump in the prices with 13% increase Q-o-Q

100

107105

106105 106

101103

104 104105 106

107

108 108 108 109111

101102 103

105104

100 100 99

95

9897

9494

102103 103

106

108

111

114 115 114

117 118

99 99 99 9998 98 98

100 101102

102104

104

101103

107

100 99 99 9998 97

9795 95

95

93

101 100 100

98 97 97

101

90

95

100

105

110

115

120

Q2FY'15

Q3FY'15

Q4FY'15

Q1FY'16

Q2FY'16

Q3FY'16

Q4FY'16

Q1FY'17

Q2FY'17

Q3FY'17

Q4FY'17

Q1FY'18

Q2FY'18

Ahmedabad Bengaluru Chennai Gurugram Hyderabad Kolkata Mumbai Noida Pune

All cities except Chennai, Kolkata and Noida witnessed price appreciation during the

quarter in absolute terms

Inde

x va

lue

(Bas

e: Q

2 FY

’15=

100)

Weighted average price index of residential units in top-9* cities




Outlook for Q3 FY’18

• We expect sales and new launches will show a growth of 30 – 40% on year on year basis in Q3 FY’18 primarily because of lower base of Q3 FY’17 (demonetization period) as well as improvement in customer confidence

• States like Maharashtra where RERA has been effectively implemented will gain most with improving customer confidence

• Many states have not yet started resolving customer grievances under RERA act or have come up with an effective RERA website. Such delays will hold back revival of customer confidence in these states

• Effective rate of 12% of GST has been a dampener for the under-construction property buyer as developers have not been clear on input tax credit. Sector is expectantly looking forward to November GST council meeting to get some respite on the rate

• Inclusion of immovable property in GST will be another big reform which can create short term hurdle in industry. Though this will be discussed in November GST council meeting but getting it through will not be that easy

Realty Decoded Q2 FY 18 DecodedQ2 FY18.pdf · Residential Trends in top-9 cities* Q-o-Q Notes: *...

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