By Prashant Thakur, Head – Research, ANAROCK Property Consultants 

Despite new launches decline, property prices in Yelahanka did not correct significantly and actually appreciated by 9% in the past 2 years

Existing since the 12th century, Yelahanka is closely linked with the origin of Bengaluru. The book ‘Bengaluru to Bangalore’ by T.V. Annaswamy mentions that the word ‘Yelahanka’ is derived from ‘Valipakka’, meaning ‘along the highway.’ Over a period of time, Valipakka (during Chola reign) transformed into Illaipakka (during Hoyasala reign) and finally into Yelahanka.

Rapid Development

The construction of the Kempegowda international airport was a game changer for the region and initiated Yelahanka’s metamorphosis from a sleepy little settlement on the outskirts of Bengaluru into a buzzing residential investment destination.

Yelahanka, which is divided into Old Yelahanka and Yelahanka New Town, is home to many defence establishments such as CRPF training school, Indian Air Force’s Air Force Station and BSF Training Centre. This micro-market also houses the largest facility of Mother Dairy in Karnataka, as well as the rail wheel factory (India’s largest manufacturer of railway wheels and axles).

Yelahanka enjoys excellent social infrastructure including educational institutions, healthcare facilities and entertainment options – and Kere Lake, Allalasandra Lake and Puttenahalli Lake (also a bird sanctuary) scale up the aesthetic value of the region. These factors have combined to attract investors and homebuyers to Yelahanka in droves.

Connectivity:

Yelahanka has an excellent connectivity quotient as it is accessible from various parts of Bengaluru through a well-established road and rail network.

Road

• The arterial roads that connect Yelahanka with other prominent areas of the city are NH 9 towards Doddaballapur and NH 44, which provides access to Devanahalli and the city.
• The elevated expressway between Hebbal and Yelahanka provides swift connectivity to the international airport.

Rail & Metro Rail

• The nearest railway station to Yelahanka is Yelahanka Junction which connects Bengaluru with the central, northern and western parts of the country via Guntakal Junction.
• Under phase III, a 32 km metro corridor has been proposed between Carmelam and Yelahanka. It is currently in the planning stage – construction is slated to commence in 2025 and conclude in the mid-2030s.

Air

• Yelahanka provides easy access to the Kempegowda International Airport, which is located 20 km away via NH 44.

Supply & Absorption 

• Between 2013 and Q1 2018, a total of 8,700 units have been launched in Yelahanka.
• The highest supply comprising 2,500 units was registered in 2015, after which the new launch supply has been declining marginally till date. This could be due to the implementation of the rule requiring any construction within a 10 km radius of Yelahanka to have a No Objection Certificate (NOC) from the Indian Air Force.

• Of the 3,300 units which are stacked in the unsold inventory, around 2,900 units are currently under construction. 
• Yelahanka has around 3,600 ready-to-move-in units, offering a plethora of options to the homebuyers and investors. While 2,300 units will be infused into the market in less than a year, another 2,800 units are likely to take more than a year for completion of the projects.

• Yelahanka’s residential market is dominated by mid-segmentproperties (₹40-80 lakh) accounting for 70% of the new launch supply since 2015, followed by 15% of properties in the ₹80 lakh-1.5 crorebudget range.
• Price Trends

  Property prices in Yelahanka have been on a constant rise constantly till Q1 2018. Interestingly, despite the impact of the economic reforms in 2016 and the decline in new launches, prices in Yelahanka have not seen any major corrections. In fact, property prices in Yelahanka have appreciated by around 9% in the past two years, with the average price as of Q1 2018 being ₹5,100/sq.ft.

  Outlook

  Apart from its immense historical importance, Yelahanka is now one of the most prominent residential hotspots in Bengaluru. Replete with well-developed social and physical infrastructure, this micro market is likely to witness increasing in tandem with the deployment of the proposed infrastructural developments in and around it.

  With maximum supply in the mid-segment housing category and availability of large land parcels, Yelahanka is one of the most promising real estate investment destinations in North Bengaluru. Moreover, leading builders have built several villa developments in Yelahanka, resulting in it also becoming a preferred weekend home destination.

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By Prashant Thakur, Head – Research, ANAROCK Property Consultants 

Project delays are one of the most alarming issues historically dogging the Indian real estate sector. The dearth of effective planning and execution of construction activities, escalating construction costs, approval delays, diversion of allocated funds to other projects and tepid sales are some of the predominant factors resulting in project delays. The homebuyer is, of course, at the losing end.

To put it in numbers, during 2017, out of the total 5.8 lakh residential units slated to be completed across the top 7 cities in India, only 1.5 lakh units were actually delivered until December 2017. This indicates that around 4.3 lakh units actually missed their stipulated completion deadlines.

The National Capital Region (NCR), one of the country’s largest residential markets, was seriously wounded by sudden policy changes, structural reforms – and the dubious practices of unscrupulous developers. As a result, it topped the list of cities with maximum project delays. Around 1.5 lakh units in NCR missed the 2017 deadline. The story in Mumbai Metropolitan Region (MMR) was no different with nearly 1.1 lakh units missing the said deadline.

NCR: Where project delays are the order of the day

In NCR, out of the total 1.9 lakh units expected to be delivered in 2017, only 42,500 units were given for possession as promised. Approximately 49% (~73,000 units) of the undelivered residential units were in Greater Noida, followed by 17% (~25,300 units) in Ghaziabad, 13% (~19,400 units) in Gurgaon and 11% (~16,000 units) in Noida.

• Greater Noida: A deeper analysis of the construction activity scenario in Greater Noida reveals some glaring issues. Developers in Greater Noida were expected to deliver around 84,200 units in 2017, of which only 13% were delivered and an additional 39,000 units (46%) are committed for completion by 2018 year-end. Due to the National Green Tribunal (NGT) directive, projects in Greater Noida have been stalled for years due to land litigations between farmers and the developers.
• Ghaziabad: Of the 29,300 units which were to be delivered in 2017, nearly 86% failed to meet their deadline. Only 14% have been handed over to buyers, and around 8,100 units (32%) are envisaged to be completed by year-end 2018. While a few projects have been sealed for recovering the Ghaziabad Development Authority’s (GDA’s) development charges, others face difficulties in obtaining completion certificates.
• Gurgaon: The Millennium City was also not able to deliver around 19,400 units in 2017; the delivery of these units was shifted to future dates. Out of 27,300 units committed for delivery in 2017, only 29% were handed over to buyers and around 14,400 units (53%) are being pushed for completion by year-end 2018. The good news is that most of the delayed units are likely to be completed in 2018, and the delivery of only limited units is being pushed to the subsequent years.
• Noida: Barring of construction activity within a 10-km radius from Okhla Bird Sanctuary between 2013-15 has stalled a large number of projects in Noida region. Out of the 23,900 units committed for delivery in 2017, 67% were unable to meet the deadline. Around 7,900 units (49%) of the delayed units are projected to be completed by December 2018.

In addition, a severe cash crunch due to syphoning of funds by developers for other projects, tweaked project details to bypass environmental/regulatory clearances, changing norms, water/sand crisis and red-tapism became some of the common causes of the long-delayed projects of NCR. Consumer sentiment was severely shaken by these delays and finally brought the sector to a standstill. Developers’ profits took a massive hit and their negative cash flows increased the delays even more.

Can NCRs developers beat the odds in 2018?

The above analysis talks only about the delayed projects that are anticipated to be delivered by the end of 2018. There is more to the story – namely the actually planned deliverables for the year 2018. Besides the delayed 79,400 units whose revised possession timelines are now December 2018, there are actually planned deliveries of around 86,600 units for this year. Altogether, NCR developers are expected to deliver around 1.66 lakh units (3.9 times the units delivered in 2017) by this year-end.

Will developers in NCR be able to deliver such a large number? That is certainly something that bears watching closely. With RERA expected to streamline residential real estate, homebuyers are hopeful that projects that have been stalled or slowed down over the years will pick up momentum and finally be delivered.

The Government authorities are certainly scrutinizing the issue by auditing long-delayed projects to chalk out initiatives and ensure their completion. All-in-all, with a massive number of residential units due for completion, year 2018 is a tough one for the NCR property market.

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By ANAROCK Property Consultants

Unsold inventory decreased by 2% from 7.27 lakh units in Q4 2017 to 7.11 lakh units by Q1 2018

According to ANAROCK Property Consultants’ latest research, 2018 has started on a positive note with residential unit launches making a comeback and recording a 27% increase in Q1 2018 from the previous quarter across top 7 cities of India. With policy reforms and structural changes now in place, developers are intent on making up for the lost ground.In Q1 2018, sales across top 7 cities of India also rose by 12% compared to Q4 2017, indicating that serious homebuyers are back, attracted by the new environment of transparency, accountability and financial discipline.

“The series of policy reforms and structural changes have transformed the way Indian real estate business is conducted. This has been a definite blessing. The sector is by no means out of the woods yet, but we are now seeing some green shoots of recovery,” says Anuj Puri, Chairman – ANAROCK Property Consultants. “The market has turned end-user friendly and 2018 is bringing new launches that match demand. The days of product mismatch are on their way out.”

Q1 2018 New Launch Tracker

• The top 7 cities recorded new unit launches of around 33,300 units in Q1 2018 as opposed to 26,300 units in Q4 2017.
• Key cities contributing to Q1 2018 new unit launches included MMR (Mumbai Metropolitan Region), Bengaluru and Kolkata, altogether accounting for 66% of addition.
• 6,500 units were launched in Kolkata – a massive rise of over 300%from Q4 2017. A large affordable housing project of around 3,500 units was a key contributor to the rise in new units hitting the market in the quarter.
• Bengaluru added 6,800 units in Q1 2018, a massive quarterly increase of 127%. This city has always adapted rapidly to changing market dynamics and is positioned particularly well for future growth.
• While MMR was a key contributor to new launches in Q1 2018, the city’s new launches recorded a drop of 25% from the previous quarter with 8,600 units. The previously intensely investor-driven city is now finally aligning itself to the changing market conditions with 87% unit additions in the sub-INR 1.5 crore price bracket.
• Chennai added 2,100 units in Q1 2018 compared to only 1,000 units in Q4 2017 – a significant rise of 110%. With political stability and elimination of input material issues, the city seems to be back in action.
• NCR’s contribution was 14% with 4,500 units, an 18% increase from the previous quarter. This region is also reorienting itself to actual housing demand, with 94% unit additions in the sub-INR 1.5 croreprice bracket.
• Pune’s contribution was 7% with 2,200 units. Developers in this historically stable market are carefully calibrating the supply to avoid creating a serious demand-supply mismatch

With more clarity on the back of faster clearances and approvals, new launches surged in Q1 2018. While there is an undeniable need to focus on executions to avoid penalization under RERA, timely new launches are also critical so that the secured approvals do not lapse. In terms of launches, 2018 has certainly commenced on a strong note. If demand picks up faster, we may witness a consummate increase in new launches as well.

“In terms of sales during Q1 2018, almost all the cities recorded a rise over the previous quarter – except Chennai, which recorded a 12% decrease,” says Anuj Puri. “The overall quarterly increase of 12% in sales is a good indicator of reviving demand.”

Improving Sales Figures

Around 49,200 units were sold in Q1 2018 with NCR, MMR, Bengaluru and Pune together accounting for 80% of the sales.

• Kolkata’s sales increased by 42% – from 2,400 units in Q4 2017 to 3,400 units in Q1 2018
• Sales in Bengaluru and Pune increased by 15% over the previous quarter and were recorded at 11,500 units and 6,800 units, respectively.
• MMR sales rose by 12% – from 11,000 units in Q4 2017 to 12,300 units in Q1 2018
• NCR’s sales increased by 11% – from 8,200 units in Q4 2017 to 9,100 units in Q1 2018. While the quarterly rise was restricted to double digits, the region recorded a year-on-year rise of 25% in new launches, indicating a slight improvement in market conditions.
• Sales in Hyderabad remained almost stagnant over the previous quarter, with 3,800 units sold in Q1 2018.
• Chennai was the only city that recorded a dip in sales at 12% – from 2,600 units in Q4 2017 to 2,300 units in Q1 2018.

The increase in launches in the top 7 cities during Q1 2018 when compared to the previous quarter resulted in overall unsold inventory decreasing by a meagre 2% – from 7.27 lakh units in Q4 2017 to 7.11 lakh units by Q1 2018. A notable aspect of new launches in Q1 2018 was that the share of Tier Idevelopers increased from 35% in the previous quarter to 40% in the current quarter. Evidently, the expected RERA Effect in terms of boosting organized players is making itself felt.

Price Movements

Residential property prices across the top 7 cities remained largely range-bound in Q1 2018 when compared to the previous quarter. The primary reason was the significant unsold stock to the backdrop of limited improvement in demand. Affordable and mid-segment housing dominated, with 74% of unit launches (24,600 units) coming in with price tags under INR 80 lakh. Supply is now being very visibly geared towards end-users, and this is a major shift from Indian real estate’s previous investor/speculator-driven orientation.

To Conclude…

The seeds of reforms sown in 2017 showed some results in Q1 2018. Although it would be premature to announce a full-fledged recovery mode, the quarterly progress is encouraging. Only time will tell if 2018 as a whole will be a comeback year for the Indian real estate sector. However, if developers remain laser-focused, add only relevant supply and ensure 100% RERA compliance, the massive latent housing demand in the country will certainly help catalyze a formal recovery.

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