Hyderabad dominated the residential market in India with new launches accounting for more than 40% of the overall launches (across all 7 cities under review) during Q3 2020. The city witnessed a 7% growth in new launches in Q3 as compared to Q2 this year. With new launches concentrated in the Kondapur, Hafeezpet and Manikonda regions, Western Suburbs continued to account for a majority share in new launches. Surfaces Reporter (SR) has covered the entire news in brief, take a detailed look:
Most new launches were in the 3 BHK configuration and development activity was concentrated in the INR 0.75 to 1.0 crore price segment which contributed 59% of the total new launches during the quarter.
Sandip Patnaik , Managing Director – Hyderabad, JLL India said, “Low inventory levels, especially in ready to move in projects have provided developers with the lever to maintain prices. With sales expected to improve further on return to normalcy, capital values have remained stable across all the submarkets in the city”.
Residential market in India, on road to recovery with strong sales
India’s residential market was more active in Q3 2020 with sales increasing by 34% versus Q2 2020. Mumbai accounted for 29% of the total sales in the quarter, while 22% of sales was contributed by Delhi NCR. Growth in sales activity was also driven by stronger demand in Chennai, Hyderabad and Pune.
Residential market activity all over India, is also being supported by renewed interest from NRIs in Q3 2020, resulting in more pent up demand in the market and increased enquiries received by developers.
Dr. Samantak Das, Chief Economist and Head of Research & REIS, India, JLL said, “The further easing of lockdown restrictions and the upcoming festive season might help in bringing buyers back to the market. An assessment of years to sell reveals that the expected time to liquidate stock has increased from 3.6 years in Q2 2020 to 4 years in Q3 2020.”
New launches were restricted with 12,654 units launched in the third quarter, a decline of 14% quarter-on-quarter. Developers focused on completion of under construction projects and clearing their existing inventory. Hyderabad and Mumbai accounted for over 60% of the total new launches in the quarter. The drop in new launches was driven by Bengaluru, which witnessed a substantial decline of over 80% as compared to Q2 2020. Development focus on mid and affordable segments continued in Q3 2020 with nearly 75% of the new launches in the sub INR 1 crore category.
Q3 2020 witnessed sales outpacing new launches as unsold inventory across the seven markets (Mumbai, Delhi NCR, Bengaluru, Hyderabad, Chennai, Pune and Kolkata ) decreased marginally from 459,378 to 457,427 units. Mumbai and Delhi NCR together account for more than 50% of the unsold stock which are at various stages of construction.
Over the last few years, residential prices in most markets have remained stagnant. Developers have been operating with low margins and the chances of a significant reduction in prices is unlikely.