The first quarter of 2021 witnessed a resurgence in sales volume across metro cities, particularly in Pune and Mumbai, amid a stamp duty cut till March.
The quarter witnessed the launch of about 600 new residential projects in the top eight metro cities.
Driven by stamp duty rate cuts, discounted deals and an all-time low in home loan interest rates, property sales continued to rise in Q1 2021. According to a 99acres.com report, a consistent demand revival in the Indian realty landscape on the back of conducive government policies and multiple incentives rolled out by developers led housing unit sales register a 20% hike, YoY, in the January to March quarter.
Hyderabad and Bangalore reported a relatively slow recovery due to the resurgence in COVID cases. However, Chennai and Kolkata surpassed the pre-COVID demand levels. Delhi NCR, Mumbai and Pune showed consistent growth despite the second wave of COVID-19 in the month of March 2021.
The quarter witnessed the launch of about 600 new residential projects in the top eight metro cities. Despite increasing COVID cases, Mumbai led all cities for the third quarter in a row with a 38 percent share in new and re-launched projects. Hyderabad surpassed Pune and took the second position with a 21 percent share. Interestingly, Delhi NCR again contributed the least with a three percent share in the overall new unit additions.
Commenting on the report, Maneesh Upadhyaya, Chief Business Officer, 99acres.com, said, “The first quarter of 2021 witnessed a resurgence in sales volume across metro cities, particularly in Pune and Mumbai, amid a stamp duty cut till March. In line with the recovering market sentiment, site visits and sales, pricing power returned to the sellers. Based on properties listed on 99acres, none of the eight metro cities recorded a downward revision in average listing prices of residential apartments in Jan-Mar 2021 against the previous quarter. Buyer responses also reported 7% surge in the same period on 99acres. Owner listings posted on 99acres also went up by 20% in Jan-Mar 2021 against Oct-Dec 2020.”
“The green shoots of recovery seen so far will have to stand the test of time with a steep surge in COVID-19 cases and the resultant restrictions in some cities may impact economic recovery, project construction timelines and buyer site visits. Fingers crossed as we enter the new financial year,” he added.
Housing Choices – Jan-Mar’21
In the first quarter of 2021, Delhi and Mumbai top the chart for luxury housing. Most of the demand for property priced more than Rs 1 crore was driven by these two metros followed by Bangalore and Hyderabad. However, understandably, affordable housing (within Rs 40 lakh) remained the most popular choice with Kolkata leading the demand followed by Chennai, Ahmedabad, and Pune. Bangalore saw the least demand for affordable houses while it leads maximum demand for mid-income housing (within Rs 40 lakh – Rs 1 crore).
Ready homes or projects nearing completion continued to be the prime choice of homebuyers, and thus commanded a premium. The premium market picked up some pace, especially on the back of NRI demand in cities like Bangalore and Pune.
Prices – Jan-Mar’21
The average property prices went up by a percent across cities like Chennai, Hyderabad, Kolkata and Ahmedabad, and maintained status quo in Delhi NCR, Mumbai, Bangalore and Pune. The rental market continued to be grim as the slightest hope of reopening of offices and educational institutions was slayed by a fresh spike in COVID cases. With vacancy rates rising consistently across cities, the rental values suffered a dent of 10-15 percent, YoY. The fast-paced dissemination of the COVID vaccine, however, may turn tables in the next two quarters for rental spaces.
Sales and Unsold inventory
Of the 25,500 housing sales in the period, Mumbai and Pune accounted for the maximum share as homebuyers rushed to book the benefit of reduced stamp duty rates until March 31 2021. Chennai and Kolkata closely followed and registered healthy sales conversions in the quarter. End-user demand thrived across cities, especially in relatively affordable pockets, which offered homes priced within Rs 75 lakh.
Unsold inventory diminished at a much faster rate than ever as end-users preferred newly delivered ready units. Moreover, a few Category A and B developers indefinitely deferred their new launch plans in March 2021 owing to a fresh surge in COVID cases. Maximum absorption of units was noted in the affordable segment, which is driven by government initiatives, subsidies and rebates. Mid-income and luxury housing segments are yet to start moving. At the end of March 2021, unsold inventory stands at around 4.6 lakh units and the quarters to sell increased to 12 from 10 in March 2020.
Commercial Property – Jan-Mar’21
The Information Technology and Business Process Management (IT-BPM) sector led the office leasing market with 20 percent of total leasing across the top eight cities. The Banking, Financial Services and Insurance (BFSI) sector followed with a 15.4 percent share in office leasing. While Chennai led all cities with a 35 percent market share, Pune and Delhi NCR followed with 20 percent and 18 percent respective shares.