MUMBAI: The improvement in housing sales momentum in the last few months has managed to renew business confidence among real estate developers as indicated by the rising project launches activity across the country.
The ongoing fourth quarter has witnessed the launch of 26,785 new residential units, more than twice the launches seen in the previous quarter that ended in September. Hyderabad property market dominated the new launches accounting for nearly 40% of the overall launches during the quarter and Bengaluru followed with over 16%, showed a JLL India report.
However, the new launches are still restricted when compared to the pre-COVID levels as more developers across markets are focussing on completion of their under-construction projects and clearing existing inventory.
While the overall sequential jump in launches is 112%, property markets of Bengaluru and Delhi-NCR have seen a substantial increase in launches at 304% and 221% rise respectively during the quarter.
The business confidence is rising given the rising sales activity. Top seven key Indian cities saw sales recovery gains of more than 50% in 2020 with Hyderabad, Mumbai and Delhi NCR gaining a maximum foothold as compared to 2019. In Hyderabad, the Western Suburbs accounted for more than 70% of the overall sales, while in Mumbai, sales were driven by Thane and Navi Mumbai, with a combined contribution of over 50%. In Delhi-NCR, Noida and Ghaziabad accounted for nearly 80% of the sales.
“GDP in the July-September quarter of 2020 showed higher than expected recovery. During the same quarter, the housing market showed some initial signs of recovery as well, with sales increasing by 34% on a sequential basis. In the backdrop of issues like job security and fall in income levels, this uptick in sales was a significant achievement. The fourth quarter has witnessed a 51% improvement in residential sales and not just that, the improvement has been evenly spread among all seven cities,” said Ramesh Nair, CEO and Country Head, India, JLL.
He believes the housing market is set to chart a new chapter of growth in 2021, fuelled by affordability, reinforced desire to own a house and renewed interest from certain buyer segments such as non-resident Indians (NRIs).
On an annual basis, overall launches across the top seven cities dipped by 31% to about 95,000 units in 2020. Development focus on mid and affordable segments continued during the quarter with more than 80% of the new launches in the sub Rs 1 crore category.
Moving ahead, the focus on this price segment is expected to continue with developers trying to reap the benefits of strong pent-up demand in this segment. Most of the new launches in the southern markets of Bengaluru, Chennai and Hyderabad were in the sub Rs 1 crore category.
According to Samantak Das, Chief Economist and Head of Research & REIS, India, JLL, as the sector show signs of recovery, prominent developers are expected to be at an advantage and capture a greater share of the market.
Given that the affordable and mid-segments below Rs 1 crore continue to witness maximum sales traction, select developers are also reviewing their projects to make them more aligned to buyers, both in terms of product and price, he said while adding that buyers are unwilling to take any risks and are showing a higher preference for completed projects, or projects where significant construction is underway.