Home sales in Tier II and III cities fall in April amid Covid-19 pandemic

After a pick-up in sales of apartments in Tier II and Tier III cities in the March quarter of 2021, the transactions dropped in April as many states imposed local lockdowns to prevent the spread of the Covid-19 pandemic.
 
Housing sales in these cities had jumped 19 per cent to 41,270 units in the March quarter on a year-on-year basis, according to data from PropEquity, a real estate-focused data analytics firm.
 
The sales in April this year stood at 5,980 units, almost 2.5 times higher than April 2020. However, the research firm said the numbers were not comparable, given the total lockdown in April last year. The April 2021 numbers, it said, were significantly down compared to the average monthly sales of 13,757 units in the March quarter.
 
“Tier II and III cities recorded a 19 per cent increase in the sales numbers. The increase can mainly be attributed to work from home policies, low interest rates, attractive payment plans, and so on," said Samir Jasuja, founder and managing director at PropEquity.
 
With the arrival of the second Covid wave in April, the numbers fell by almost 50 per cent, Jasuja said, adding, “We expect housing numbers to improve as the country moves towards the unlock phase and gains momentum on the vaccination drive in the coming months.”
 
The Tier II and III cities tracked were Agra, Ahmedabad, Amritsar, Bhiwadi, Bhopal, Bhubaneswar, Chandigarh, Coimbatore, Dehradun, Gandhi Nagar, Goa, Guntur, Indore, Jaipur, Kochi, Lucknow, Ludhiana, Mangalore, Mohali, Mysore, Nagpur, and others.
 
In Q1CY2021, home sales in Tier II and III cities rose 6 per cent on a sequential basis. In the December quarter of CY2020, these cities reported sales of 38,906 units, translating into monthly sales of 12,969 units.
 
Big developers said they had seen growth in home sales in these cities in the March quarter, though sales have dipped since then.
 
DLF, the country's largest developer, said it had seen a "phenomenal" increase in enquiries and sales from micro markets like Indore, Panchkula, Kasauli, Lucknow, and Kochi in Q3 and Q4 of FY21.
 
“We are getting enquiries from customers in metros who are looking to relocate, and from non-resident Indians who want to buy a home for their families,” said Aakash Ohri, senior executive director-marketing at DLF.
 
Ohri said sales were fine in the first few days of April as customers were visiting the sites. “Rising infections and subsequent localised lockdowns impacted the sales,” Ohri said.
 
Tata Realty & Infrastructure and Tata Housing Development Corporation, units of Tata Sons, also saw a “significant” increase in sales from their projects present in Tier II and Tier III cities in FY21.
 
Owing to an increase in demand from the non-resident Indian community, Tata Housing recorded Rs 100 crore revenue from Tritvam, its luxury project in Kochi, said its managing director Sanjay Dutt.

 
Properties at good locations and close to metros have been witnessing increased demand. For example, Tata Housing’s Myst overlooking the Himalayan foothills in Kasauli and Rio De Goa located at Dabolim, Goa, Dutt said.
 
"Our Myst project recorded over 345 per cent increase in revenue and 86 per cent increase in enquiries in FY20-21 compared to FY19-20, and we had to introduce fresh inventory in order to keep up with the demand. Rio De Goa has also been gaining traction as a vacation and second home with rising interest from Mumbai," Dutt said.
 
Dutt added that sales had been impacted in FY22 as rural areas had seen a Covid spike.
 
Before the second Covid wave, especially during the October-December period, property consultant Anarock saw a two-fold rise in enquiries for properties in Lucknow as against the corresponding pre-Covid-19 period in 2019. Interestingly, Lucknow even raced ahead of some of the top cities in terms of total enquiries by Anarock.
 
“Moreover, what aids the real estate market in these smaller towns and cities is their affordable prices as against big cities and the superior infrastructure that many of these Tier II and Tier III cities provide. Also, cities like Ahmedabad or Kochi – that previously also attracted NRIs – are further seeing a rise in demand. Many NRIs who want to return to India are eyeing these markets," said Anuj Puri, chairman at Anarock Property Consultants.
 
Puri added that most of these smaller cities and towns had begun to see the fallout of the second wave from the first and second week of April onwards. “The situation deteriorated thereafter and till date there are localised restrictions and lockdowns across most of these cities. There has been more than 60 per cent drop in housing sales in April till date as compared to the previous months. There are no site visits happening and unless the lockdowns or restrictions are eased, any significant recovery in sales is doubtful,” Puri said.