The southern cities are better investment destinations due to higher potential for growth, reveals the PropEquity Top Tier II Cities study. Here's how the other cities fared.
BASE INDICATORS
Parameters that helped pick the winners
Parameters that helped pick the winners
Projects launched
Vadodara saw 200 project launches, the highest average in 2014-15. While it mainly has affordable housing, Nashik and Jaipur have a high midhousing supply.
Vadodara saw 200 project launches, the highest average in 2014-15. While it mainly has affordable housing, Nashik and Jaipur have a high midhousing supply.
Residential supply
Again Vadodara was at the top, with the highest yearly average launch of 12,000 units in 2014-15. Three northern cities are in the top 4 because of much bigger projects in north than in the rest of India.
Again Vadodara was at the top, with the highest yearly average launch of 12,000 units in 2014-15. Three northern cities are in the top 4 because of much bigger projects in north than in the rest of India.
Possession by projects
Vadodara has delivered twice the number of projects in the past two years as launched in this period. Western tier II cities, unlike their tier I counterparts, delivered more projects, indicating the commitment of developers here
Vadodara has delivered twice the number of projects in the past two years as launched in this period. Western tier II cities, unlike their tier I counterparts, delivered more projects, indicating the commitment of developers here
Unsold stock
Vadodara leads the unsold inventory with over 20,000 units. Inventory in top five cities is more than the combined inventory of the next 14 cities. It fell in all cities due to a fall in new product launches.
Vadodara leads the unsold inventory with over 20,000 units. Inventory in top five cities is more than the combined inventory of the next 14 cities. It fell in all cities due to a fall in new product launches.
Residential absorption
Vadodara leads tier II cities, with an average absorption of 12,500 units, at least four times more than in Dehradun, Gandhi Nagar and Thiruvanan thapuram. It validates the resilience of affordable segment in troubled times as in Vadodara.
Vadodara leads tier II cities, with an average absorption of 12,500 units, at least four times more than in Dehradun, Gandhi Nagar and Thiruvanan thapuram. It validates the resilience of affordable segment in troubled times as in Vadodara.
ADVANCED INDICATORS
Parameters that helped pick the winners
Parameters that helped pick the winners
Increase in size of market
Change in the size of the market measures the health of the real estate sector. The jump in Dehradun (69%) was due to improvement in the number of units sold and average price of units sold. Dehradun market is just worth `8 billion, compared with `43 billion of Vadodara.
Change in the size of the market measures the health of the real estate sector. The jump in Dehradun (69%) was due to improvement in the number of units sold and average price of units sold. Dehradun market is just worth `8 billion, compared with `43 billion of Vadodara.
Absorption to supply ratio
This ratio (number of units absorbed to number of units launched) indicates the sales conversion in the market. Even with a huge fall in new launches, north India was the worst performer, where four out of six cities had less than 85% ratio, possibly leading to higher inventory build-ups in the coming years.
This ratio (number of units absorbed to number of units launched) indicates the sales conversion in the market. Even with a huge fall in new launches, north India was the worst performer, where four out of six cities had less than 85% ratio, possibly leading to higher inventory build-ups in the coming years.
Unsold inventory to yearly absorption ratio
Thiruvananthapuram and Visakhapatnam are best placed in tier II cities, with only one year worth of inventory. So, the south is expected to benefit the most as soon as the economy picks pace. Mohali has nearly five years of inventory.
Thiruvananthapuram and Visakhapatnam are best placed in tier II cities, with only one year worth of inventory. So, the south is expected to benefit the most as soon as the economy picks pace. Mohali has nearly five years of inventory.
Percentage completed projects
Of 2,000 projects launched in 19 top tier II cities between 2009-10 and 2011-12, 550 or 27%, are still not completed. All northern cities, except Jaipur, have been the worst performers, with more than 40% of the projects still under construction.
Of 2,000 projects launched in 19 top tier II cities between 2009-10 and 2011-12, 550 or 27%, are still not completed. All northern cities, except Jaipur, have been the worst performers, with more than 40% of the projects still under construction.
Average delay in project execution
Lucknow leads with 20 months of average delay during the review period. Compared to average delay of 21 months for tier I cities, the figure for tier II cities stands at 15 months.
Lucknow leads with 20 months of average delay during the review period. Compared to average delay of 21 months for tier I cities, the figure for tier II cities stands at 15 months.
METHODOLOGY
Attractiveness index
The study is divided into two parts. The first is the ranking of cities on individual base indicators. The second deals with composite rankings, calculated via advanced indicators. Base indicators include projects launched, projects offered possession, units launched, units absorbed, total unsold stock, launch price increase, and size of market.
Attractiveness index
The study is divided into two parts. The first is the ranking of cities on individual base indicators. The second deals with composite rankings, calculated via advanced indicators. Base indicators include projects launched, projects offered possession, units launched, units absorbed, total unsold stock, launch price increase, and size of market.
Advanced indicators drive the cities' real
estate potential and include size of market, increase in size of market,
possession/launch ratio (project launched in 2010-12), absorption to
supply ratio (unit based), CAGR of absorption (2014-15), absorption in
new launches, increase in absorption prices, total unsold inventory to
yearly absorption ratio, average delay in project execution (months),
and construction committed to completed.
Scope of study includes apartments,
independent floors and villas, and does not take into account plotted
development. It only looks at residential supply in the organised domain
and does not include housing schemes by government bodies. The scope of
time utilised for this study is two years (April 2013 to March 2015),
except for calculation of delays, where four-year period is taken, and
for project completion trend, where 2010-12 period launched projects are
considered.
Ranking technique is used to normalise a set
of data points. The variables are segregated into positive and
negative, based on their effect on the residential real estate sector.
While positive variables are given rankings of 19 - 1 (19 being the
best), the negative variables are given rankings of 1 -19. The resultant
variables are then subjectively given weights. The weighted scores are
calculated to arrive at cumulative scores for each city and the one with
the highest cumulative score is ranked the highest.
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Odyssey IT Park, Road No. 9,Wagle Estate
Thane (W) - 400 604, Maharashtra, India
Mobile :
(+91) 9833 4583 23Telephone :
(+91) 22 2580 6868(+91) 22 2580 6865E-mail: mchithane@gmail.com
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