New launches are expected to go up in H2 2021 as developers launch new projects to monetise their land banks.
Driven by the low base effect, less stringent lockdowns, and accelerating vaccination drives during Q2 2021 — demonstrating improved resilience in the market — residential sales in Q2 (April-June) 2021 across the top seven cities increased by 83% as compared to Q2 2020, according to JLL’s Residential Market Update – Q2 2021.
By comparison, in Q1 2021, sales of residential units continued an upward trajectory, increasing by 17% on a sequential basis. During the first wave of COVID-19, residential sales dropped by a record 61% quarter-on-quarter to 10,753 units in Q2 2020. However, the impact of the second wave has been limited with sales in Q2 2021 dipping by 23% to 19,635 units.
Sales of more than 45,000 residential units were recorded in H1 2021 as against 38,204 units in H1 2020, an increase of 18% Y-o-Y. The sustained levels of residential sales present clear signs of demand and buyer confidence coming back to the market. The need for secured tangible assets and aspirations to own larger homes as remote working becomes the new norm is driving sales of residential properties across the country.
Commenting on the same, Siva Krishnan, Head – Residential, India, JLL, said, “Development focus on mid and affordable segments continued in H1 2021 with 72% of the new launches in the sub INR10 million category. Moving ahead, while the focus on these price segments is expected to continue, developers are likely to consider new launches of larger-sized apartments in order to capture changing consumer preferences.”
“Homebuyers have also become even more cautious in affecting their home purchase decisions. Today, as most prospective buyers start their search online, the more established developers with good online presence and immediate brand recall benefit. Also, there is an increased preference and willingness to pay a premium for projects by developers with an established track record,” he added.
Mumbai has consistently been the largest contributor to sales over the past five quarters. In H1 2021, Mumbai accounted for 26% of the total sales. Furthermore, Delhi NCR, Pune, and Hyderabad followed, each contributing 15% or more.
Mumbai – Sales in the city were driven by Navi Mumbai and Thane which accounted for more than 50% of the total offtake during H1 2021.
Delhi NCR – Noida accounted for nearly 50% of the sales during the first half of the year.
Pune – North East (Viman Nagar, Kharadi, Wagholi) and North West (Hinjewadi, Wakad, Baner) accounted for 74% of the sales during H1 2021.
Hyderabad – The offtake of residential units in H1 2021 was driven by Western Suburbs (Gachibowli, Manikonda, Kukatpally, Miyapur, Nizampet) with a contribution of more than 67%.
Dr. Samantak Das, Chief Economist and Head Research & REIS, India, JLL, said, “The residential sector displayed improved resilience in Q2 2021 when compared to Q1 2021. There is no denying the fact that the second COVID-19 wave dented the market following a good recovery curve. However, the impact was muted when compared to the same period last year. Most of the changes observed in the sector have been structural in nature and demand for homes is only expected to increase. The RBI is expected to hold policy rates at the existing historically low levels, while prices will remain mostly range bound. The resultant affordable buoyancy will continue to attract fence sitters and serious homebuyers.”
“If the downward trajectory in COVID-19 cases is sustained, the sector is expected to make a healthy recovery in the second half of 2021,” he added.
The top seven cities under consideration witnessed new launches of 27,057 units in Q2 2021, a decrease of 20% Q-o-Q. As the second COVID-19 wave intensified, several developers deferred new launches and focused on the completion of under-construction projects and clearing their existing inventory. Nevertheless, compared to the same period last year, new launches almost doubled. Despite states imposing lockdowns of varying intensities, developers launched projects across the seven cities.
On average, new launches of more than 35,000 units were witnessed every quarter between Q1 2019 and Q1 2020. In the COVID-era (Q2 2020 – Q2 2021), this has decreased to ~23,000 units. New launches are expected to go up in H2 2021 as developers launch new projects to monetise their land banks. Moreover, a reversal in trends with developers launching larger sized houses and apartments to capture the changing preferences of consumers in the post-COVID era is also possible, believes JLL.
The first half of 2021 witnessed new launches of 61,010 residential units, a jump of 10% over H1 2020. Hyderabad continued to dominate new launches and accounted for almost a third of the overall launches during H1 2021. Mumbai and Bengaluru, which contributed 18% and 17% respectively to the overall new launches followed.
The markets of Hyderabad, Delhi NCR, and Chennai witnessed a substantial increase in launch activity in H1 2021 when compared to the same period last year.