Developers are offering attractive freebies including payment schemes such as no EMIs for a year, no stamp duty and so on to attract homebuyers who pressed ‘pause’ in the last few months.
Residential prices in the majority of India’s residential markets have remained stagnant in the past few years.
Residential market in Delhi NCR gained further momentum in Q1 2021 (Jan-March, 2021) with an increase in new launches as well as sales. New launches in Q1 2021 more than doubled on a sequential basis. Majority (55%) of the launches were witnessed in Noida with launches by reputed developers. Gurugram contributed 25% of the new launches. These were mainly concentrated in Golf Course Extension Road and Dwarka Expressway.
In this quarter, most of the new launches were in the upper mid (Rs 10-15 million) and high-end (> Rs 15 million) price segments with projects in premium locations gaining traction.
In terms of demand, sales registered an uptick by 23% as compared to the last quarter. New project launches during the quarter garnered good demand traction as buyers preferred projects by established developers with proven execution capabilities. Noida accounted for nearly half (49%) of the units sold followed by Ghaziabad which contributed 27% of the overall sales in Delhi NCR.
“With improved infrastructure and quality projects at attractive prices, the submarket has emerged as a lucrative option for mid-segment homebuyers. Prices remained range bound across all the submarkets as developers focus on offloading the unsold inventory and drawing buyers with attractive payment terms,” said Manish Aggarwal, Managing Director, North & East India, JLL India.
Residential sales revive across India
Residential sales in Q1 (Jan-March) 2021 recovered to more than 90% of the volumes witnessed in Q1 2020 (pre-Covid) across the top seven cities. The cities including Chennai, Hyderabad, Kolkata, and Pune surpassed the sales volumes of Q1 2020. Overall sales increased by 17% on a sequential basis. Importantly, sales either improved or stayed at similar levels (in Q1 2021 when compared to Q4 2020) in majority of the residential markets under consideration. Mumbai has consistently been the largest contributor to sales in the last four quarters. In Q1 2021, Mumbai accounted for 23% of the sales, followed by Delhi NCR with a share of 21%.
However, Kolkata saw the maximum increase in sales activity in Q1 2021 in comparison to the fourth quarter of 2020. In Kolkata, the offtake of residential units in Q1 2021 was driven by South Suburbs (Joka, Kasba, Behala, Jadavpur, Tollygunje) and East Suburbs (EM Bypass, Rajarhat, Topsia) with a combined contribution of more than 70%.
The sustained growth in sales presents clear signs of demand and buyer confidence coming back to the market. This has been on the back of historically low home loan interest rates, stagnant residential prices, lucrative payment plans and freebies from developers and government incentives such as the reduction of stamp duty in states like Maharashtra and Karnataka (for affordable housing). The ease of lockdown restrictions and the commencement of the vaccination drive have further aided in bringing buyers back to the market,” said Dr. Samantak Das, Chief Economist and Head Research & REIS, JLL.
“However, the rising concerns of the rapid spread of the pandemic has compelled several state government to lay and enforce stringent lockdown like restrictions. While this is essential to break the chain, it is likely to impact real estate business in the next few months. At the same time, the rapid progress in the rollout of vaccines paired with the ongoing restrictions provides us elbowroom to believe that this is a short-term blip and the market will be back on track sooner than later,” he added.
Buyer’s’ market with price continuing a downward trend
Residential prices in the majority of India’s residential markets have remained stagnant in the past few years. In Q1 2021, prices remained largely stagnant when compared to the previous quarter, across all the seven markets under review. This being said, it is important to point out that few developers in certain markets are providing moderate price discounts to boost sales.
Moreover, developers are offering attractive freebies including payment schemes such as no EMIs for a year, no stamp duty and so on to attract homebuyers who pressed ‘pause’ in the last few months. This has led to a reduction in ‘effective prices. This rationalisation combined with reduced home loan rates has further improved affordability in the residential market.