If 2019 was all about the non-banking financial crisis and the subsequent liquidity crunch, then the Covid-19 pandemic wasn’t great news for India’s troubled real estate sector. Given that the industry was hoping to turn the corner this calendar year, it has come to be one of the toughest years—sales and development activities came to a grinding halt for a few months following the pan-India lockdown. Given the situation, real estate prices remained static and in some pockets of India, says Krish Raveshia, CEO of Azlo Realty, corrected due to muted demand. But, there seems to be a silver lining at the fag end of the year for the sector, which contributes about 7% to the country’s GDP (gross domestic product).
Anarock Property Consultants expects the top seven cities in India to cumulatively record a 35% jump in housing sales in the ongoing festive October to December quarter on a sequential basis. If this pans out, then housing sales for calendar year 2020 would have rebounded to more than 50% of the overall sales clocked in the previous year—approximately 261,500 units were sold in 2019 across the top seven cities. “This is significantly higher than previous predictions,” says a report by the residential broking and advisory firm.
The firm has said that it sold 1,805 homes across the National Capital Region (NCR), Mumbai, Chennai, Kolkata, Bengaluru, Pune, Hyderabad, Ahmedabad, and Lucknow, and Dubai in the months of September and October this year. Last year, the firm sold 1,016 units in the corresponding period. “Our sales in these two months saw a 78% year-on-year jump over the same period in 2019,” says Anuj Puri, chairman, Anarock Property Consultants. “Much can be attributed to the multiple schemes and offers available across cities this year—particularly the limited-period stamp duty cuts in Maharashtra. In many cities, these incentives add up to an overall financial benefit of 5%-15% of the property cost.”
With an eye on an economic revival, the Reserve Bank of India had cut key policy rates and in turn Indian banks had responded by offering consumers lower interest rates—industry estimates suggest that they are at their lowest levels in almost 15 years. Interest rates on home loans are anywhere between 6.9% and 9%. “The rock-bottom home loan interest rates have also played a role in India, while NRIs seem to be making the most of the reduced property prices in Dubai,” Puri says.
City-wise, Mumbai remains Anarock Property Consultants’ most active market, with 573 units being sold in this two-month period, amounting to an annual jump of 116%. Chennai saw an almost fivefold yearly jump with 223 homes being sold this year as against just 45 units in the corresponding period last year. “Most sales are by end-users looking to buy and own homes in a marketplace radically transformed by the Covid-19 pandemic,” says Puri.
As the pandemic shows no signs of receding, a faster turnaround of the economy, as was being hoped for, is unlikely to happen soon. However, there is optimism in the air following prospects of the early arrival of a vaccine for Covid-19. To this end, many forecasters have predicted that India’s GDP would shrink by 6% to 8% as against the earlier forecast of over 10%.
“The expectation of (real estate) prices remaining muted for key markets in 2021 will help boost demand and recovery of the sector,” says Raveshia of Azlo Realty. But a lot will depend, he adds, “on the Indian government controlling the rising number of cases, liquidity, and recovery in economic growth”.