October 24, 2017

 

Aggregate value of new sales declined to Rs 12,404 crore in FY2017 -a 34% fall over FY2016: Ratings agency ICRA

Even as new sales bookings improved between April and June 2017, com pared to Q4 FY2017, the realty sector continues to face demand head winds due to subdued macro-economic environment and consumer sentiment in near-term, ratings agency ICRA said.

According to ICRA, the value of sales has steadily improved from Rs 2,709 core in Q3 FY2017 to Rs 3,310 crore in Q4 FY2017 and further to Rs 3,703 crore in Q1FY2018, which is indicative of the waning impact of demonetisation.

“While the impact of demonetisation on the industry has been gradually waning, the implementation of RERA and GST over the first half of FY2018 has created short-term disruption in sales volumes of many developers,“ ICRA Vice President and Sector Head Shubham Jain said in a statement.

He further said the industry faces demand headwinds on account of subdued macro-economic environment and consumer sentiment.

“What provides a ray of hope is the growth in volumes reported by a few developers which could be indicative of the scope for organised players to consolidate their market share under the new regulatory regimes of RERA and GST,“ Jain said.

According to ICRA, the aggregate value of new sales bookings at Rs 20,100 crore in FY2015 declined to Rs 18,716 crore in FY2016 and further to Rs 12,404 crore in FY2017, registering a decline of 33.7 per cent over the previous year. The decline in FY2017 was marked by 27 per cent and 9.1per cent reduction in the area booked and the average sales realisation, respectively, it said.

ICRA said due to the implementation of GST and RERA purchase decisions by buyers were deferred.

“The GST implementation has impacted sales performance in Q1 and Q2 of FY2018 due to confusion on impact of pricing on the end customer. But, with stabilisation of transition related issues, festive season and low base of sales during the third quarter in the previous year, Q3 FY2018 is expected to be better for most developers,“ it said.

As per ICRA, developers have continued their focus on execution and completion of projects. Project completion in the sample set increased from 40.04 million sqft in FY2015 to 50.27 million sqft in FY2017.

ICRA expects completion of projects to help developers improve sales velocity.

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Source: epaperbeta.timesofindia.com