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New launches in the real estate sector continued to remain subdued for six months in a row in May, according to a report by Edelweiss Securities Ltd. On a month-on-month basis, new launches at the pan-India level (top seven cities) fell 46%. A favourable base of last year, makes the new launches data look robust, but analysts caution against getting carried away.

By share of launches in May, Hyderabad and Pune notched up gains of 18–20% m-o-m each, while MMR logged the highest declines of 17% m-o-m, followed by Chennai, Bengaluru and National Capital Region (NCR) that posted reductions off 5–11% m-o-m each. Kolkata’s share remained broadly stable, registering a mere increase of 3% m-o-m, said the Edelweiss report.

Another analysis by consulting firm ANAROCK Property Consultant showed that the pandemic has significantly altered previously dominant trends in the Indian residential market. It has dented the overall new affordable housing supply share across the top seven cities. The latest ANAROCK research indicates that out of the total new launches of nearly 36,260 units across the top seven cities in Q2 2021, the affordable segment which is priced at around 40-80 lakh contributed a mere 20% share.

Notwithstanding the incumbent government’s continued focus on affordable housing, private players have changed their strategy on the back of the pandemic. "Affordable housing developers' profit margins are wafer-thin. Amid rising inflationary trends of basic input costs (cement, steel, labour, etc.), it has become difficult for them to launch budget homes since increasing prices in this highly cost-sensitive segment are inadvisable at this time," said the ANAROCK report.

Meanwhile, demand also continues to remain weak keeping unsold inventory elevated. Analysts say, although supply is coming down, in the wake of bleak demand, offloading existing stock would be challenging for real estate players.

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