In the last few months, the improvement in housing sales momentum has managed to revive business trust among real estate developers, as indicated by the growing activity of project launches across the country.

Sequential Rise in Housing Launches

The ongoing fourth quarter has recorded the launch of 26,785 new residential units, more than twice the launches seen in the previous quarter that ended in September. Hyderabad property market dominated the new launches accounting for nearly 40 percent of the overall launches during the quarter, and Bengaluru followed with over 16 percent, showed a JLL India report.

Even though, as compared to the pre-COVID stages, new launches are still restricted as more developers across markets concentrate on completing their under-construction projects and clearing existing inventory.

While all the overall sequential jump in launches is 112 percent, the Bengaluru and Delhi-NCR property markets have seen a sharp increase in launches over the quarter at 304 percent and 221 percent respectively.

Despite the increasing sales activity, company morale is rising. With Hyderabad, Mumbai and Delhi NCR gaining maximum traction compared to 2019, the top seven major Indian cities saw revenue recovery gains of more than 50 percent in 2020. The Western Suburbs accounted for more than 70% of overall sales in Hyderabad, while sales were led by Thane and Navi Mumbai in Mumbai, with a combined contribution of over 50%. Noida and Ghaziabad accounted for nearly 80 percent of the sales in Delhi-NCR.

For the July-September quarter of 2020, GDP showed a higher recovery than anticipated. The housing market showed some initial signs of improvement during the same quarter as well, with sales rising sequentially by 34 percent. This rise in profits was a major accomplishment in the light of problems such as job protection and falling in revenue levels. A 51 percent increase in residential sales was observed in the fourth quarter, and not only that, the improvement was uniformly distributed across all seven cities.

The housing market would also set to map a new growth chapter in 2021, fueled by affordability, increased willingness to own a home, and growing interest from certain segments of buyers such as non-resident Indians (NRIs).

Top Seven Markets in Residential Developments

Overall launches in the top seven cities declined by 31 percent annually to around 95,000 units in 2020. With more than 80% of the new launches in the below Rs 1 crore range, development focus on mid-and affordable segments continued during the quarter.

In the future, it is expected that the emphasis on this price segment will continue with developers attempting to reap benefits in this segment from strong pointed demand. Most of the new launches were in the below Rs 1 crore range in Bengaluru, Chennai, and Hyderabad's southern markets. Experts say that as the sector shows signs of recovery, prominent developers are expected to be at an advantage and capture a greater share of the market.

Given that the affordable and mid-segments below Rs 1 crore continue to experience maximum sales momentum, selected developers are also reviewing their projects to make them more compatible with buyers, both in terms of product and price. The buyers are also unwilling to take any risks and show a greater preference for completed projects or projects where substantial construction is unfinished.

By: Shailaja K