Even though the sales of residential units have improved in the July – September 2020 quarter, it will be a long road to recovery for the real estate sector to reach pre-Covid-19 levels, says Knight Frank.
According to the real estate consultant, the sale of residential units across eight major metros in the country – Kolkata, Chennai, Pune, National Capital Region (NCR), Mumbai, Bengaluru, Hyderabad and Ahmadabad – picked up pace in Q2FY21 to reach 33,403 – up a massive 246 per cent on a sequential basis. Sales of residential units across these metros during the period under review are, however, still 33 per cent lower compared to the 49,905 units sold across these cities in the January – March 2020 period, and around 46 per cent lower as compared to the quarterly average of 61,467 units sold in 2019.
Among regions, Mumbai, Bengaluru and NCR accounted for 56 per cent of the quarterly sales volume during the recently concluded quarter compared to 62 per cent in 2019, primarily due to a fall in Bengaluru’s share in total sales for the period.
“It is too soon to say that the real estate sector is out of the woods. A number of stuck real estate deals would have been completed during the quarter,” said Gulam Zia, executive director for valuation & advisory retail & hospitality at Knight Frank.
A similar September 30 report by ANAROCK Property Consultants pegged the sale of residential units across top 7 cities in India at 29,520 units in the September 2020 quarter. Sales were significantly higher than the preceding quarter, when the coronavirus pandemic had brought sales down to just 12,730 units, ANAROCK said.
“Mumbai Metropolitan Region (MMR), Bengaluru, NCR and Pune altogether accounted for 84 per cent sales in the July-Sept quarter. MMR saw maximum sales of 9,200 units, followed by Bengaluru with 5,400 units, NCR with 5,200 units and Pune with 4,850 units,” said Anuj Puri, chairman, ANAROCK Property Consultants.
In terms of new launches, the top 7 cities witnessed supply of nearly 32,530 units in the September 2020 quarter as against 41,220 units in the March 2020 quarter – reaching over 79 per cent of the pre-COVID-19 quarter levels. Hyderabad, Kolkata and NCR saw new supply increase during the quarter as against the first quarter of 2020.
Despite the uptick in sales, weighted average prices during the recently concluded quarter dipped 3 – 7 per cent compared to a year ago in six of the eight markets surveyed by Knight Frank. “Among cities, Bengaluru (up 3 per cent) and Hyderabad (up 4 per cent) were the only markets that saw prices grow YoY, as developers in these predominantly end-user markets sustained pricing power in a favourable demand-supply scenario,” the report said.
|MARKET||PRICE CHANGE YOY|
|Source: Knight Frank Research|
Attractive home loan rates, fall in prices of residential units, aggressive marketing of ready inventory and indirect discounts / freebies to the buyers are some of the factors Knight Frank believes have helped move the demand needle in the September 2020 quarter.
Going ahead, Knight Frank expects the road ahead for residential property segment to remain challenging. Developers’ cash flows remain under pressure despite the extension on loan moratoriums and RERA completion deadlines are some of the factors that will impact sales.
|RESIDENTIAL SALES SNAPSHOT|
|MARKET||2019 QUARTERLY AVERAGE||Q1 2020||Q2 2020||Q3 2020|
|Source: Knight Frank Research|
“If the economy picks up over the next few months, the demand for residential units will come back to pre-Covid-19 levels sooner than later. As seen in Maharashtra (cut in stamp duty rates), we need a demand-side stimulus from the government,” said Shishir Baijal, chairman and managing director at Knight Frank India.
Puri, however, remains hopeful. Reduced stamp duty charges in Maharashtra coupled with developers’ incentives and rock-bottom home loan interest rates are a major attraction for homebuyers, he says, and the upcoming festive season quarter (October - December) may see housing sales recover to almost the pre-COVID-19 levels.