Despite declining trend, Covid-19 impact muted on MMR, Pune residential prices

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July 16, 2021 3:15 AM

In comparison, the fall in prices over the last one year has not been much, with MMR seeing a decline of 2% in H1 2021 versus H1 2020, and Pune a decline of 1.5% during the same period.

The findings are a part of ‘India Real Estate January-June 2021’ report by real estate consultants Knight Frank India.The findings are a part of ‘India Real Estate January-June 2021’ report by real estate consultants Knight Frank India.

The Mumbai Metropolitan Region (MMR), the most expensive real estate market in India, and Pune have seen a decline of 17% and 17.5% respectively, in prices of residential properties in the last five years. However, the impact on prices has been muted in the last one year, despite the disruptions caused by the Covid-19 pandemic.

According to property consultants, the continuous decline in prices, historically low interest rates and additional discounts offered by real estate developers have made these two buyer’s markets.

Rajani Sinha, national director and chief economist research, Knight Frank India, told FE, “This price reduction is on paper. If one takes into account price negotiations with developers and discounts, the price decline would be much steeper.”

In MMR, the average price of residential properties hovered around Rs 8,093 per square foot between January and June 2016, which is down to Rs 6,750 per sq ft in January-June 2021. MMR still remains the most expensive residential market in the country. In Pune, the price has dipped from Rs 4,860 per sq ft in H1 2016 to Rs 4,010 per sq ft in H1 2021.

In comparison, the fall in prices over the last one year has not been much, with MMR seeing a decline of 2% in H1 2021 versus H1 2020, and Pune a decline of 1.5% during the same period.

The findings are a part of ‘India Real Estate January-June 2021’ report by real estate consultants Knight Frank India.

The National Capital Region (NCR) meanwhile, despite being infamous as a purely investor-driven market, has not witnessed much fluctuation in prices. Traditionally high unsold inventory and higher number of stressed properties in the market are possible explanations for this trend. In the last five years, the price decline has been around 4%, with prices now at Rs 4,165 per sq ft in NCR.

Bengaluru, which has traditionally been a buyer’s market, has also seen stable prices over the last five years. The city recorded a price of Rs 4,920 per sq ft in January-June 2021, which is a mere 2.3% up from Rs 4,805 per sq ft recorded in the same period in 2016.

Another southern city, Hyderabad, seems to be emerging as a real estate hotspot. The market has seen a 30% surge in prices over the last five years, backed by a sharp increase in demand and a pick-up in commercial and office real estate, which is lending support to momentum in the residential real estate segment. In Hyderabad, the prices hover at around Rs 4,720 per sq ft in H1 2021 as against Rs 3,620 per sq ft in H1 2016.

“Hyderabad market is doing very well. It’s been a few years since the uncertainty around the bifurcation of the state has been put behind, and the supportive policies of the state government are reflecting in the overall residential momentum. Hyderabad has seen a sharp rise in residential sales as well, which is also driving prices,” Sinha said.

The Indian real estate market recorded a year-on-year increase of 67% in residential sales, with 99,416 residential units sold between January-June 2021 across top markets. New launches in the same period surged 71% y-o-y at 103,238 units. As sales volumes stabilised, especially in the early part of H1 2021, unsold inventory reduced by 1% over the same period last year. Prices remained mostly contained with a reduction of -1% to -2% y-o-y, according to Knight Frank.

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