India's GDP growth numbers, released on February 26 by the Central Statistics Office, have shown that whilst the overall economy has shown a growth of 0.4 percent year-on-year for the third quarter, the construction and financial, real estate and professional services have shown a growth of 6.2 percent and 6.6 percent, respectively during the period, placing them among the top three contributors to the GDP.
“The latest GDP numbers released by the Indian government reinforce the optimism that prevails in businesses that the worst has passed for the Indian economy and that we are now on a recovery and growth path. This performance underscores the need for support to the construction and real estate industries to ensure that that they continue contributing to nation building,” said Sankey Prasad, FRICS, chairman and managing director (India) at Colliers.
India's gross domestic product (GDP) in the third quarter of FY21 rose marginally at 0.4 percent, in line with expectations, reaffirming that the economy had managed to exit the coronavirus pandemic-led slump by 2020-end, according to official data released by the National Statistical Office on February 26.
The GDP for FY21 is expected to shrink by a slightly larger margin of 8 percent, according to the government's updated official forecast.
“The growth shown by construction and financial, real estate and professional services is on expected lines. With opening up of the economy in a phased manner, construction activities resumed and this was evidently visible during the last quarter of 2020. Similarly, the leasing activities in commercial real estate and sales and launches in residential segment reflected robust signs of recovery. The performance of both office and residential segments were significantly better during October-December than the previous two quarters,” Samantak Das, Chief Economist and Head Research & REIS, JLL, told Moneycontrol.
“We believe that this growth will instill further positive sentiment in the economy with consumer demand and investments getting over the adverse impact of the COVID-19. The gradual revival of the economy will lead to growth of the commercial real estate in a phased manner. Office markets across top 7 cities are expected to witness total net absorption of 30 mn sq. ft during 2021 as against slightly over 25 mn sq. ft in 2020,” he said.
"India’s economy is now finally out of a technical recession after two consecutive quarters of de-growth. As revealed, the marginal growth numbers (0.4 percent) indicate that the country is now bouncing back to growth territory following a rise in economic activity in third quarter of FY 2020-21. It is definitely a positive trend that all were hoping to see after the sluggishness witnessed in previous quarters," said Anuj Puri, Chairman - ANAROCK Property Consultants.
"Even real estate - which makes a significant contribution to the GDP – saw visible signs of recovery with residential sales rising significantly in the festive quarter," he said.
As per ANAROCK research, the first three quarters of FY 21 (Apr.-Dec. period) saw total residential sales of 93,150 units across the top 7 cities in which festive period (Oct.-Dec.) alone comprised 55 percent share. Similarly, other service sectors namely financial and insurance have also gained momentum, thereby positively impacting the overall economy.
The real estate sector had felt the heat post the pandemic with numbers falling by 5.3 percent in Q1 FY21 from 6 percent growth in the same period last fiscal, the Central Statistics Office data had showed.
The government had imposed a nationwide lockdown from March 25 to curb the spread of COVID-19 infections, which adversely affected all sectors of the economy.
India’s real or inflation-adjusted GDP shrank 7.5 percent during July-September this year, confirming fears of a crippling slide across several industries and services that continue to bleed profusely through multiple deep cuts caused by COVID-19-induced disruptions.
This contraction came on the back of a nearly 24 percent fall in April-June.
The rate of contraction has definitely slowed down and there has been visible uptake in economic activity in the recent past especially during the festive season.
The last few quarters have witnessed a gradual unlocking of the economy and pent-up demand has been supporting housing sales. Moreover, the repo-linked lending rate (RLLR) for home loans has touched a historical low. This has resulted in improved affordability and has been stimulating house purchases, at least from larger, reputed developers with a strong track-record of timely project completion and quality construction. Attractive discounts/payment schemes have provided further stimulus.
The Maharashtra and Karnataka governments also announced measures like stamp duty reduction boosting sales.
A CII-Anarock COVID-19 Sentiment Survey found that the work-from-home and online education culture has resulted in buyers seeking larger homes, even if it entails moving to peripheral areas. New launches are gaining traction post-COVID. Discounts offered during the COVID-19 pandemic, cheaper home loans and government incentives such as Maharashtra's stamp duty cut led nearly 62 percent of homebuyers to consider it expedient to buy homes right away, it said.
Indian residential market is now seen to be heavily dominated by end-users. As many as 74 percent respondents are looking to buy a property now are doing it for self-use while just 26 percent are looking at it from an investment perspective. In comparison, during the lockdown period, the share of investors was higher at 41 percent, it said.
Affordable homes (above Rs 45 lakh) see highest preference post-COVID, with over 40 percent share against 31 percent pre-COVID – an increase of 9 percent; almost 38 percent of this demand is from Delhi-NCR, followed by 21 percent from Kolkata, the survey said.
The National Statistical Office (NSO) had on January 7 released its first Advance Estimates (AE) of GDP for the year 2020-21. The real GDP at 2011-12 prices in 2020-21 has been estimated to contract 7.7 percent and nominal GDP at current prices by 4.2 percent, it had said.
As per quarterly estimates of NSO, real GDP contracted by 15.7 percent in the first half of 2020-21. Real GDP on a quarter-on-quarter basis grew at 21 percent from Q1FY21 to Q2FY21. The AE of 2020-21 reflects a continued resurgence in economic activity in Q3 and Q4 – which would enable the Indian economy to end the year with a contraction of 7.7 percent. The continuous quarter-on-quarter growth endorses the strength of economic fundamentals of the country to sustain a post-lockdown V-shaped recovery, it had said.
