Mumbai: New launches and discounts offered by real estate developers have resulted in pick-up of sales volumes across cities during January-March, a report by US financial major Merrill Lynch said.
"New project launches at attractive prices, discounts and schemes on offer to attract buyers and launches by renowned developer brands resulted in pick-up in sales during the period," it said in a statement.
However, it pointed out that the demand in Gurgaon is slowing, mainly on the back of slowdown in new launches as developers are focusing on execution and inventory clearance. Also, rising prices is impacting the demand.
Merrill Lynch said that property prices in Mumbai, which have appreciated at CAGR of 14 percent over last 10 years, will have to correct in the coming years.
"We believe this trend (price appreciation) is unsustainable and prices will have to correct and remain subdued over next 2-3 years. This will allow improvement in affordability as income levels catch-up with residential prices. Most of new launches during January-March have been at a discount to average market prices," the firm's Research Analyst Abhishek Gupta said.
According to the report, Bangalore witnessed highest number of residential sales in a quarter since 2008, mainly led by flurry of new launches in run-up towards the local new year (Ugadi) in April and affordability, as property prices here have risen by CAGR of 8.5 percent in last 10 years.
"Besides, rise in number of investors in Bangalore and end-users becoming comfortable with job security and salary hikes in 2013 have resulted in the increase in sales," Gupta said.
Despite being the most affordable city among Tier-I cities, Noida's absorption rate has remained subdued and unsold inventory continues to rise since 2010, the report said.
"We maintain a negative outlook on Noida/ Greater Noida as we believe developers will struggle more in terms of timely execution than sales. We reiterate that timely execution will be the differentiating factor in this region in near future," Gupta added.