India’s top seven cities saw an 83 percent jump in sales of houses in the April-June 2021quarter from the year-ago period, a sign of resilience in the market and a limited impact of the second coronavirus wave, a report by real estate firm JLL has said.
The second wave of coronavirus, however, did push the sales 23 percent lower in Delhi-NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Pune, and Kolkata in the June quarter compared to the January-March quarter, JLL’s Residential Market Update – Q2 2021 report said. Mumbai includes Mumbai city, Mumbai suburbs, Thane city and Navi Mumbai.
“The residential sector displayed improved resilience in Q2 2021 when compared to Q1 2021. There is no denying the fact that the second COVID-19 wave dented the market following a good recovery curve. However, the impact was muted when compared to the same period last year,” Samantak Das, Chief Economist and Head Research & REIS, India, JLL said.
Mumbai and Pune accounted for 42 percent of the total sales in the first six months of 2021, a report by JLL titled Residential Market Update – Q2 2021 has said.
“Development focus on mid and affordable segments continued in H1 2021, with 72 percent of the new launches in the sub Rs10-million category,” said Siva Krishnan, head - Residential, India, JLL.
While the focus on these segments would continue, developers were likely to consider new launches of larger apartments to capture changing consumer preferences, he said.
Sales were driven by the low base effect, less stringent lockdowns, and accelerating vaccination drives during the quarter, it said.
In the first quarter of FY 2021, sales of residential units continued an upward trajectory, increasing 17 percent on a sequential basis. During the first wave of COVID-19, housing sales dropped by a record 61 percent quarter-on-quarter to 10,753 units in Q2 2020. However, the impact of the second wave has been limited with sales in Q2 2021 dipping by 23 percent to 19,635 units, it said.
Mumbai top of the charts
Homebuyers had become even more cautious in making a decision, Krishnan said. As most buyers start search online, the more established developers with good online presence and immediate brand recall benefit.
“There is an increased preference and willingness to pay a premium for projects by developers with an established track record,” he said.
Mumbai has consistently been the largest contributor to sales over the past five quarters. In H1 2021, Mumbai accounted for 26 percent of the total sales. Delhi-NCR, Pune, and Hyderabad followed with each accounting for 15 percent or more sales.
In Mumbai, sales were driven by Navi Mumbai and Thane, which accounted for more than half of the total offtake during H1 2021, the report said.
In Pune, North East (Viman Nagar, Kharadi, Wagholi) and North West (Hinjewadi, Wakad, Baner) accounted for 74 percent of the sales during H1 2021.
In Hyderabad, buying in Western Suburbs (Gachibowli, Manikonda, Kukatpally, Miyapur, Nizampet) accounted for more than 67 percent of the sales, the report said.
“If the downward trajectory in COVID-19 cases is sustained, the sector is expected to make a healthy recovery in the second half of 2021,” Das said.
More than 45,000 residential units were sold in H1 2021 as against 38,204 units in H1 2020, an increase of 18 percent. The sustained levels of residential sales present clear signs of demand and buyer confidence coming back to the market.
The need for secured tangible assets and aspirations to own larger homes as remote working becomes the new norm is driving sales of residential properties across the country, the report said.
Coming soon
As many as 27,057 units were launched in the seven cities in the June quarter, a decrease of 20 percent Q-o-Q. As the second COVID-19 wave intensified, several developers deferred new launches and focused on completing projects and inventory.
Still launches were almost double that of the year-ago period. On average, new launches of more than 35,000 units were witnessed every quarter between Q1 2019 and Q1 2020. In the COVID-era (Q2 2020 – Q2 2021), this decreased to around 23,000 units.
New launches are expected to go up in H2 2021 as developers look to monetise their land banks. There is a possibility of reversal in trends, with developers launching larger houses and apartments to keep with the changing preferences of consumers in the post-COVID era, JLL said.
In the first half of 2021, 61,010 houses were launched, a jump of 10 percent from the year-ago period. Hyderabad continued to dominate, accounting for almost a third of the launches in H1 2021.
Mumbai and Bengaluru, contributed 18 percent and 17 percent respectively. Hyderabad, Delhi-NCR and Chennai witnessed a substantial increase in launch activity in H1 2021 when compared to the same period last year.
Unsold inventory up marginally
As new launches outpaced sales in Q2 2021, unsold inventory across the seven markets increased marginally from 470,750 units to 478,172 units.
Mumbai, Delhi-NCR, and Bengaluru together accounted for nearly 70 percent of the unsold stock. An assessment of years to sell (YTS) reveals that the expected time to liquidate this stock has gone up from four years and six months in Q1 2021 to five years and two months in Q2 2021.
Prices to remain range-bound
Housing prices in most residential markets have remained stagnant in the past few years. In Q2 2021, prices remained largely stagnant when compared to the previous quarter, across the seven cities. Developers in certain markets have been providing moderate price discounts, attractive freebies including payment schemes such as no equated monthly installments (EMI) for a year to boost sales. Prices are expected to be largely range-bound across most of the markets in the short to medium term, the report said.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
