Demand set to exceed supply in 7 cities by 2015

HYDERABAD: The demand for affordable housing in top seven cities, including Hyderabad, is likely to outstrip supply by 2015, according to Cushman & Wakefield (C&W). The real estate consulting firm in its annual report found that the estimated demand for residential property in cities namely National Capital Region, Mumbai, Bangalore, Chennai, Hyderabad, Pune and Kolkata is expected to touch 2.3 million units over the next five years while the estimated supply will be approximately 1 million units, leaving a shortfall of 130 per cent i.e. over 1.3 million units. The residential property market is growing at a Compound Annual Growth Rate (CAGR) of 11 per cent and the estimated volume requirement across the country will be 3.94 million housing units, including 2.3 million units in the seven cities.Interestingly, the gap between demand and supply is likely to be intense in the affordable housing segment, whose demand is growing approximately three times more than the supply. “The present economic situation may be viewed as a transitory point for the real estate dynamics in India.Although, the market looks positive in the medium term with considerable demand, the industry seems to be affected by the rising interest rates, rise in construction costs and inflation.However, the long-term perspective suggests that the sector will continue to witness demand in all areas,” said Anurag Mathur, MD of C&W. While NCR is expected to record the highest demand for over 700,000 units, Mumbai is likely to record the highest CARG of 14 per cent between 2011-15.Similarly, Bangalore is expected to witness a demand for approximately 2,87,000 units.“As a result of significant population migrating to tier I cities, these locations are likely to witness highest demand,” Mathur explained. C&W also anticipates that the demand is likely to exert an upward pressure on property prices especially in markets like NCR, Mumbai and Bangalore where the gap between demand and supply is high. “The upcoming supply needs to be priced judiciously,” said Akshay Kulkarni, executive director of C&W.