SHARP FALL IN ABSORPTION RATES IN NCR, MMR and Bangalore

Gurgaon, June 15, 2012

PropEquity, India’s leading Real Estate data analytics and research firm on Friday released a report which showed that residential unit absorption numbers in the first quarter in the National Capital Region (NCR) and Mumbai Metropolitan Region (MMR), plunged over 50% due to economic slowdown.

In a research conducted for the latest First Quarter of the Calendar Year 2012, the total absorption in NCR has dropped to 15,104 units from previous years’ 35,420 units. Total residential supply in the First Quarter of the Calendar Year 2012 was 107,731 units.

In MMR, the total absorption fell in the First Quarter of the Calendar Year 2012 to 11,473 units from 27,676 units. The Total supply in First Quarter of the Calendar Year 2012 was 89,461 units.

Samir Jasuja, Founder and Chief Executive Officer of PropEquity, says “The take-up rates in key micro-markets have fallen significantly. In the coming Quarter, there would be strong pressures on many micro-markets and we expect inventory overhang to increase and absorption could continue to slow down. Mumbai and Gurgaon have already seen one of the sharpest falls in absorptions; with MMR seeing a drop of 58% and NCR with a drop of 57%. If this trend continues, there could be ‘stage 1’ price correction in the range of 5% to 20%, especially in micro-markets of NCR, MMR and Hyderabad. Some micro-markets, where inventories have been managed well by developers would be able to overcome this phase. Bangalore has done reasonably better, given the demand has been end-user driven and new inventories have been fairly low in First Quarter of Calendar Year 2012. Generally, investor-driven markets would see downside risks than end-user driven markets.”In Bangalore, the total absorption fell just 18% to 7,704 units in the first quarter from previous years 9,410 units.

Gaurav Pandey, Senior Vice President & Head – Research and Consulting, says “We believe that the priority for the government would now be managing growth than inflation, especially when the investor confidence has drastically dipped and there are serious downside risks. We’re expecting a 50 basis cut in both repo & reverse repo rate and 50 basis cut in CRR in the upcoming monetary policy review. While everyone is expecting a significant drop in CRR and marginal dip in repo rate, historically, we’re currently at one of the lowest CRR. The current CRR is at 4.75%, while back in December 1974 we saw probably the lowest CRR at 4%. A CRR cut alone would not be impactful on Real Estate and the Quarter 3 of Calendar Year 2102could be a serious challenge for this sector; especially for listed real estate companies that have large debts, for whom demand slowdown would be a serious impact on their current valuations. A minimum of 50 basis cut on repo rate is desirable and anything less wouldn’t be sufficed.”

About PropEquity:

PropEquity is India’s first online real estate intelligence platform that tracks over 45,000 projects of 8,200 developers over 40 cities and features over 5 years of catalogued data on the platform.

P.E. Analytics, the company behind PropEquity is built on pure innovation. The products created by the company are unique in Indian context and have been validated by the market and marquee customers. The company’s endeavor is to create an information service enterprise through continuous innovation and integration of real time data, analytics and cutting edge technology to achieve higher transparency. Its key beneficiaries include over 100 Real Estate PE Funds, Developers, Institutions, Retail and other industries that need research,data and analytics. It currently has 250 employees.

PropEquity’s offering include Collateral Risk Management, Realty Index, B2C - One Click Report and Catchment Area Analysis.

P E Analytics has been founded by Samir Jasuja, a serial entrepreneur with over 18 years of domain experience in Real Estate, PE & Financial Services. Catch us live at NDTV Profit's "The Property Show".