New launches of residential properties across the top real estate market were 71% higher in the first half of 2021 with markets like Hyderabad, Kolkata, Ahmedabad, and NCR outperforming bigger residential markets in the country, due to gradual resumption of economic activity.
According to a report by consulting firm Knight Frank on the India Real Estate – Residential, Q2 2021 accounted for a little more than 1/4 of all launches in the first half of 2021. However, a comparison with the pandemic affected quarter from a year ago shows that Q2 2021 has recorded a YoY growth of 388% over Q2 2020.
The report mentioned that Hyderabad saw a 278% jump in new launches followed by Kolkata at 156%, Ahmedabad at 137% and NCR at 107%. The bigger residential market like Mumbai, Bengaluru and Pune saw 53%, 24%, 52% jump in residential unit launches in H1 2021.
“The second wave of COVID-19 infections should be seen as more of a speed bump as YoY growth in market volumes remains strong in half-yearly and quarterly terms in the January to June 2021 period,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.
The pandemic second wave was also less severe on residential real estate as compared to the first wave on the sales of properties across the country. Total residential sales increased by 67% to 99,416 residential units in the first half of 2021 across top markets, led by Mumbai and Pune, that together constituted over 45% of the total sales amongst key markets.
“The limited period stamp duty cut which spiked home sales in Mumbai and Pune adequately demonstrates the need for policy level intervention to revive the residential market.
Going by the tremendous success of the stamp duty cut in Maharashtra, other states may also consider similar demand stimuli at appropriate times that will not only help sales velocity but also propel economic activity,” said Baijal.
Interestingly, the period of the second wave coincided with that of the first wave last year which had brought the residential sales market to a screeching halt. Fortunately, the second wave, despite its extremely morbid potency, was less severe on the residential real estate market.
“We expect the residential segment to remain buoyant due to the attitudinal shift in mindsets of potential buyers and as and when normality returns, we expect the sales volumes to pick up pace,” said Baijal.
The share of sales of homes costing less than Rs 50 lakhs reduced by around 500 basis points (BPS) and constituted 42% of all sales in the January-June 2021 period. Homes costing over Rs 1 crore constituted about 19% of all sales, while units at Rs 50 lakhs to 1 crore improved by approximately 400 BPS to be at 39%, the report mentioned.
As sales volumes stabilized, especially in the early part of H1 2021, unsold inventory reduced by 1% over the same period last year. However, prices remained mostly contained with a reduction of -1% to -2% Year on Year (YoY) across markets.