In a city like Mumbai, people want to live in the city’s centre and enjoy the vibrant culture.
Residential property sales have staged a comeback in the first quarter of 2021 and even breached pre-COVID-19 levels, according to reports by two consultancies.
While a report by JLL said the sales recovered to more than 90 percent of the volumes witnessed in Q1 2020 (pre-Covid) across the top seven cities, another report by Anarock has said the housing sector in the top 7 cities staged a comeback post-COVID-19 with housing sales increasing by 29 percent and new launches by 51 percent during this quarter against the corresponding period in 2020.
The cities including Chennai, Hyderabad, Kolkata, and Pune surpassed the sales volumes of Q1 2020. Overall sales increased by 17 percent on a sequential basis. Importantly, sales either improved or stayed at similar levels (in Q1 2021 when compared to Q4 2020) in a majority of the residential markets under consideration. Mumbai has consistently been the largest contributor to sales in the last four quarters. In Q1 2021, Mumbai accounted for 23 percent of the sales, followed by Delhi NCR with a share of 21 percent, the JLL report said.
However, Kolkata saw the maximum increase in sales activity in Q1 2021 in comparison to the fourth quarter of 2020. In Kolkata, the offtake of residential units in Q1 2021 was driven by South Suburbs (Joka, Kasba, Behala, Jadavpur, Tollygunje) and East Suburbs (EM Bypass, Rajarhat, Topsia) with a combined contribution of more than 70 percent, the JLL report said.
“The sustained growth in sales presents clear signs of demand and buyer confidence coming back to the market. This has been on the back of historically low home loan interest rates, stagnant residential prices, lucrative payment plans and freebies from developers and government incentives such as the reduction of the stamp duty in states like Maharashtra and Karnataka (for affordable housing). The ease of lockdown restrictions and the commencement of the vaccination drive have further aided in bringing buyers back to the market,” said Samantak Das, Chief Economist and Head Research & REIS, JLL.
As many as 58,290 homes were sold in the top 7 cities in Q1 2021 in comparison to 45,200 units in Q1 2020 - effectively breaching pre-COVID levels. MMR and Pune together accounted for 53 percent of housing sales in the quarter – MMR sales increasing by 46 percent annually, and Pune by 47 percent, the Anarock data said.
With approximately 8,670 units sold, Bengaluru was the only city in the top 7 to not record a major yearly change in total sales numbers in this quarter.
Both reports noted that new launches too witnessed a jump.
As for new launches, the first quarter of 2021 witnessed new launches of 33,953 residential units, a jump of 27 percent over the last quarter of 2020. Hyderabad continued to dominate new launches and accounted for more than a fourth of the overall launches during the quarter. Bengaluru, which formed more than 16 percent of the new launches followed.
The markets of Delhi NCR and Chennai witnessed a substantial increase in launch activity during the quarter. New launches are still at 84 percent when compared to the pre-Covid levels of Q1 2020. Developers across the markets under review remain focused on the completion of under construction projects and clearing their existing inventory, the JLL report said.
Development focus on mid and affordable segments continues in Q1 2021 with 69 percent of the new launches in the sub Rs 10 million categories. In the coming quarters, the focus on these price segments is expected to continue with developers trying to reap the benefits of strong pent up demand in these segments. Most of the new launches in the markets of Bengaluru, Hyderabad, and Pune were in the sub Rs 10 million category Bengaluru – 77 percent, Hyderabad – 76 percent, Pune – 100 percent, the JLL report said.
New launches in the top 7 cities yielded 62,130 units in Q1 2021, against 41,220 units in Q1 2020. Again, Bengaluru was the only city to see an 11 percent yearly drop in new launches. MMR, Pune, and Hyderabad together contributed 66 percent of the total new supply in the quarter, Anarock said.
Despite spiralling new launches in this and the previous quarter, unsold inventory in the top 7 cities saw a nominal yearly decline – from 6.44 lakh units towards Q1 2020- end to approximately 6.42 lakh units by Q1 2021-end. However, on a q-o-q basis, unsold stock rose by 1 percent due to a robust healthy new launch pipeline in most cities, Anarock said.
“Demand boosters like stamp duty cuts, further reductions in home loan rates by most banks (to 6.70 percent) and ongoing developer discounts and offers helped the residential sector stage a convincing comeback in Q1 2021. Egged on by buoyant sales and enthusiastic consumer sentiment in the October-December period, developers launched several new projects in this quarter - with some spill-over from the pandemic-dampened 2020 pipeline,” said Anuj Puri, Chairman - ANAROCK Property Consultants.
“MMR and Pune were the most active in this quarter since the limited-period stamp duty cuts and other sops and discounts substantially reduced acquisition cost," says Puri.
"MMR's homebuyers have responded proactively to the bottomed-out property prices in the country’s most expensive real estate market. This is adequately vouchsafed by the significant rise in property registrations in Mumbai in the first two months of the year,” he said.
Mid-segment housing saw the maximum new launches in the quarter with a 43 percent overall share, with the affordable housing segment accounting for 30 percent. The supply of luxury housing (priced >Rs 1.5 crore) also rose by 31 percent in Q1 2021 against the corresponding period in 2020, the Anarock report said.