by Mr. Anuj Puri is Chairman & Country Head at Jones Lang
LaSalle India
Lack Of Confidence Reduced Investor Interest, But Empowered End
Users
The year 2013 was a drag for the Indian economy with poor
macroeconomic conditions. Slowing
income growth, sustained weakness in the rupee, sky-rocketing
inflation and high borrowing rates
combined to make consumers vary of spending. This reflected
visibly in the Indian consumer
confidence index, which has been falling consistently over the
last three quarters.
Housing absorption statistics the first three quarters of 2013
also reflect this trend in consumer
sentiment - from a largely positive QoQ growth to largely negative
growth as of 3Q13.
Despite this, residential property prices continued to exhibit
upward movement even as the
weakening rupee steadily eroded purchasing power.
India consumer
confidence index
(Quarterly
index by AC Neilson)
4 Q10 131
1 Q11 131
2 Q11 126
3 Q11 121
4 Q11 122
1 Q12 123
2 Q12 119
3 Q12 119
4 Q12 121
1 Q13 120
2 Q13 118
3 Q13 112
Net absorption
growth during first three quarters of 2013
(QoQ %)
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| Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India. |
Over the last four years (from the trough of 2Q09 up to 3Q13),
taking into account the period of
economic slowdown, apartment prices have risen by over 50% on an
average across India. As a
result, absorption remained subdued during 2013 (until 3Q13),
falling further from the already tepid
levels observed during the same period last year.
Total new stock
during the first three quarters
(in million
square feet)
Difference in
absorption rate of 2013 and 2012
(net
absorption/available stock; period from 1Q-3Q for both years)
This was particularly true of cities where new supply rose
sharply. However, affordable markets such
as Kolkata and a few emerging locations near city peripheries,
witnessed better absorption rates.
Preliminary data indicates that a subdued sentiment continued into
the 2013 festive season (the initial
few weeks of the fourth quarter) when developers typically sell
around a third of their annual
inventories.
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