A year after the pandemic, today green shoots in the economy are visible and Moody’s Analytics also predicts that India’s gross domestic product (GDP) is projected to grow by 12 per cent in 2021.
The corona scare brought India’s burgeoning real estate sector to a grinding halt in 2020. The harsh outcomes of the countrywide lockdown including migration of labourers surfaced and covid-induced distress engulfed the realty segment. A year after this, as we streamline efforts to defeat corona with more knowledge, cautions and tested methods including mass inoculation drives, it is also vital to map the real estate segment’s growth journey to make sure that hard-earned gains are not reversed in future.
The unprecedented turnaround of events hit the segment hard. According to a JLL report, net leasing of office spaces fell by 50 per cent in the quarter of July to September 2020, across seven major cities to 5.4 million sq. ft. During the January-September 2020 period, the net leasing of offices fell by 47 per cent to 17.3 million sq ft from 32.7 million sq ft in the same period in 2019. Similarly, in the retail sector, a total of 54 malls were expected to be launched across India in 2020 but only 5 malls could start operations. A PropTiger Real Insight report said that only 19,038 units were sold across India’s eight key property markets during the second quarter of 2020. Similarly, only 12,564 units were launched during this period across the same markets. Percentage-wise, housing sales in India declined by 79 per cent annually and new supplies dipped by 81 per cent in 2020.
Underlining the immense challenges and chalking out measures to safeguard the sector from catastrophic consequences, the central and state governments were quick to announce relief measures and extended support through the Atmanirbhar Bharat campaign, stamp duty cuts, reductions in home loan rates, among others. The loan moratorium announced by the central bank largely aided developers and investors during the volatile times. Strategies were changed quickly by adapting digitization and leveraging new concepts like a work-from-home model, satellite offices, second homes, big spaces, etc. Ease in investment opportunities through flexibility in REITs and tax reliefs boosted market sentiments and today, the sector is on its road to recovery. Emerging trends like tech-enabled systems increased momentum of operations, demand for bigger flat sizes and independent floors are also catalyzing growth.
The demand picked up with buyers coming forward to take advantage of the reduced demand and increased negotiation potential and strong interest from sectors such as technology, banking, financial services, research, and others. Buoyed by an amalgamation of factors like increased demand, low-interest rates, better household savings and government support, the top 7 cities of the country have staged an impressive comeback post-Covid-19 this year. A recent ANAROCK report confirms the fact that housing sales in 7 cities increased by 29 per cent and new launches by 51 per cent during this quarter against the corresponding period in 2020. Around 58,290 units were sold in Q1 2021 – a yearly increase of 29 per cent – in comparison to 45,200 units in Q1 2020. Delhi NCR, Mumbai, Bengaluru and Pune together accounted for 83 per cent of the sales in the quarter. The performance of micro-markets in the Delhi-NCR region including Noida and Gurgaon witnessed a double-digit expansion in property appreciation prices with 11 per cent and 13 per cent growth respectively.
A year after the pandemic, today green shoots in the economy are visible and Moody’s Analytics also predicts that India’s gross domestic product (GDP) is projected to grow by 12 per cent in 2021. The realty sector will definitely have a positive outlook in 2021 and as we move forward, we will see a steady flow of investment that will ensure growth opportunities with higher returns.
by, Shashank Vashishtha, Executive Director, eXp India