New home launches highest since 2014, but developers want to keep launching

Despite residential realty launches in 2022 hitting an eight-year high — even amid repo-rate hikes — developers are keen to keep hitting the launch button.

The residential launch pipeline this year doesn’t seem to be drying. Macrotech Developers (Lodha Group) has announced 16 new projects for the second half for the ongoing fiscal year, totalling to 7.3 million square feet and Rs 10,000 crore in estimated sale value.

Prestige is expected to launch 8 to 10 million square feet of residential space in Bengaluru alone this fiscal, while Puravankara has about 15 million square feet in the pipeline in the same period.

Ajmera Realty and Infra isn’t to be left out either. The next 18 months could see the company’s inventory richer by 2,000 units totalling to around 2,200 crore in new sales. Rate hike or not, developer confidence is at a high.

What makes the present and future launch tally significant is that they come even as the RBI has increased the repo rate four times this fiscal, resulting in it touching a 3-year high. Future rate hikes cannot be ruled out either. However, real estate players say the domino effect these hikes have had on home loan rates has not dampened the demand.

“In spite of the rise in interest rates, we are seeing that there is good demand and people are still moving in. The reason for this is people understand that this is a temporary phase,” said Dhaval Ajmera, the director at Ajmera Realty & Infra, “Till the threshold limit reaches 9 percent, I don’t see the demand going down. It will still continue.”

Two weeks ago, data from property consultant Anarock indicated that home launches in India had reached their highest levels since 2014. Between January and September, developers launched 2.65 lakh homes across the country, surpassing the 2019 tally of 2.34 lakh units. Hyderabad and the Mumbai Metropolitan Region (MMR) accounted for 54 percent of these launches.

The remainder of 2022 is expected to see a total of 3.4 lakh new homes up for grabs. While this is still a far cry from the 5.45 lakh homes launched in 2014, it is still a staggering number. Developers say these launches are in line with prevailing demand.

“If you look at the data, it’s not like launches are exceeding demand,” said Abhishek Kapoor, CEO of Puravankara, “Absorption rates in many of the markets are in fact higher than whatever is being launched because some of the earlier inventories are being absorbed.”

Data points to this trend too. Nearly 3.7 lakh homes are set to be sold this year in comparison to the launch of estimate of 3.4 lakh units. Housing sales have hit an eight-year high as well, with NCR and MMR accounting for 48 percent of sales this year, even as lending rates have turned dearer.

However, the rapidly swelling launch pipeline could result in an inventory overhang should the housing market face even a slight stumbling block. The recovery, thereafter, could take a few quarters. For now, though, developers are not too worried.Also Read: Home sales in H1 surge 119% across top 7 cities, hit Rs 1.56 lakh crore.