While Mumbai accounted for 29 percent of the total sales in the quarter, 22 percent of those came from Delhi-NCR.
India’s residential market was more active in the third quarter of 2020, with sales increasing by 34 percent quarter on quarter, according to JLL Research.
While Mumbai accounted for 29 percent of the total sales in the quarter, 22 percent of those came from Delhi-NCR. Growth in sales activity was also driven by stronger demand in Chennai, Hyderabad, and Pune.
“We are feeling cautiously optimistic about the residential market, driven by sales volumes in Mumbai and Delhi. A combination of favourable factors such as low mortgage rates, attractive prices combined with developers’ lucrative payment plans together reinforce the longer-term potential of the sector. For end users, the next 12 months are ideal to buy a house,” said Ramesh Nair, chief executive officer and country head, India, JLL.
“In the subsequent quarters, the translation of demand into sales will primarily hinge on enhanced consumer confidence, which in turn depends upon the continued implementation of progressive government policies amidst the gradual revival of the Indian economy at large,” he added.
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Residential market activity is also being supported by renewed interest from NRIs in Q3 2020, resulting in more pent-up demand in the market and increased enquiries received by developers.
“The further easing of lockdown restrictions and the upcoming festive season might help in bringing buyers back to the market. An assessment of years to sell reveals that the expected time to liquidate stock has increased from 3.6 years in Q2 2020 to 4 years in Q3 2020. While the residential space remains unpredictable, favourable supply dynamics could deliver potential upside for both homebuyers and developers in the medium-term,” said Samantak Das, chief economist and head of research and REIS, India, JLL.
New launches: Focus on mid and affordable segment continues
New launches were restricted with 12,654 units being launched in the quarter, a decline of 14 percent QoQ. Developers focused on completion of under-construction projects and clearing their existing inventory.
Hyderabad and Mumbai accounted for over 60 percent of the total new launches in the quarter. The drop in new launches was driven by Bengaluru, which witnessed a decline of over 80 percent as compared to the year-ago period, the report said.
Development focus on mid and affordable segments continued in the quarter, with nearly 75 percent of the new launches in the sub-Rs 1 crore category. Moving ahead, the focus on these price segments is expected to continue with developers focussing to reap the benefits of strong pent-up demand.
Unsold inventory dips
The July-September quarter witnessed sales outpacing new launches as unsold inventory across the seven markets (Mumbai, Delhi-NCR, Bengaluru, Hyderabad, Chennai, Pune, and Kolkata) decreased marginally from 459,378 to 457,427 units. Mumbai and Delhi NCR together account for more than 50 percent of unsold units which are at various stages of construction.
Over the last few years, residential prices in most markets have remained stagnant. Developers have been operating with low margins and the chances of a significant reduction in prices is unlikely.
In Q3 2020, prices remained largely stable across all the seven markets when compared to the previous quarter.
However, it is important to note that developers in certain markets are providing moderate price discounts to kick-start sales, thereby facilitating cash flows to tide over the crisis in the short term, the report said.Moreover, developers are offering flexible payment schemes such as no EMIs for a year and other schemes to attract prospective homebuyers who pressed ‘pause’ in the last few months. This could be the first sign of a broader recovery of the residential market in the country, it said.