According to JLL, India's capital city of New Delhi witnessed residential sales improve by 43% in Q4 2020 as compared to the last quarter (Q32020) on the back of festive discounts, low interest rates and some premium launches by established developers. However, sales are yet to reach the preCovid levels witnessed in 2019. Noida continued to dominate sales with 45% share of overall sales in Delhi NCR. This was followed by Ghaziabad, which contributed 31% of the total sales.
The residential market also rebounded with some prominent new launches. In Q4 2020, new launches more than tripled when compared to the last quarter. Majority of the launches were recorded in Gurugram, which accounted for 61% of the new launches followed by Noida which contributed 24% of the launches.
"Homebuyers are increasingly becoming more confident about returning to the market. Site visits and enquiries from prospective buyers have been increasing consistently, driven primarily by end users who are keen in ready to move in projects and newly launched projects by established developers," said Manish Aggarwal, Managing Director, Delhi NCR, JLL India.
Interestingly, the quarter also witnessed the launch of plotted developments and individual floors by prominent developers.. While prices remained, range bound across all the submarkets, developers are offering freebies and attractive payment terms to serious homebuyers.
Accelerated residential sales in India
India's residential sector is seeing an acceleration in sales leading to a fast-paced recovery from the impact of the pandemic. Residential sales accelerated by 51% in Q4 as compared to Q3 2020. It is important to note that this improvement has been holistic with seven key residential markets showing an uptick in sales. Mumbai, the country's largest contributor to sales for this quarter accounts for 23% of the overall sales, while the Delhi NCR market accounts for 20%. Pune saw the maximum increase in sales activity as compared to the third quarter at 147% with 3,323 units sold in all.
Seven key cities saw recovery gains of more than 50% in 2020 with Hyderabad, Mumbai and Delhi NCR gaining maximum foothold as compared to 2019:
In Hyderabad, the Western Suburbs accounted for more than 70% of the overall sales
In Mumbai, sales were driven by Thane and Navi Mumbai, with a combined contribution of over 50%
In Delhi NCR, Noida and Ghaziabad accounted for nearly 80% of the sales
Dr. Samantak Das
"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 (sub INR 1 crore) continue to witness maximum sales traction, select developers are also reviewing their projects to make them more aligned to buyers, both in terms of product and price. Additionally, buyers are unwilling to take any risks and are showing higher preference for completed projects, or projects where significant construction is underway. The Central Bank is leading the way to recovery by holding policy rates at historically low levels to initiate a cycle of consumption led growth. As income levels come back to normal, more buyers will come to the market to make the most of this time," Dr. Samantak Das, Chief Economist and Head of Research & REIS, India, JLL.
The translation of this demand into sales will primarily hinge on enhanced consumer confidence, which in turn depends on the continued implementation of progressive government policies amidst the gradual revival of the Indian economy at large
New launches, new hope
Q4 2020 witnessed 26,785 new residential unit launches, more than twice the new launches witnessed in Q3 2020. New launches in Q4 2020 increased in all markets under review, when compared to Q3 2020. Bengaluru and Delhi NCR saw a substantial increase in launches during the quarter. Hyderabad dominated new launches accounting for nearly 40% of the overall launches during the quarter and Bengaluru followed with over 16%. This being said, it is important to note that new launches are still restricted when compared to the pre-COVID levels. Developers across markets focused on completion of under construction projects and clearing existing inventory.
On an annual basis, overall launches across the top seven cities dipped by 31% to about 95,000 units in 2020 as compared to about 137,000 units in 2019. Development focus on mid and affordable segments continued in Q4 2020 with more than 80% of the new launches in the sub-INR 10 million (INR 1 crore) category. Moving ahead, the focus on this price segment is expected to continue with developers trying to reap benefits of strong pent up demand in these segments. Most of the new launches in the southern markets of Bengaluru, Chennai and Hyderabad were in the sub INR 10 million category.
Unsold inventory increases marginally
Q1 2020 (in units) Q2 2020 (in units) Q3 2020 (in units) Q4 2020 (in units) Growth (%) Q4 2020 over Q3 2020 Aggregate (top 7 cities) 455,351 459,378 457,427 462,380 1% Top 7 cities include Delhi NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Pune and Kolkata. Mumbai includes Mumbai city, Mumbai suburbs, Thane city and Navi Mumbai. Source: Real Estate Intelligence Service (REIS), JLL Research As new launches outpaced sales, unsold inventory at various stages of construction across the seven markets under review increased marginally from 457,427 units to 462,380 units.
Mumbai and Delhi NCR together account for more than 50% of the unsold stock. However, an assessment of years to sell reveals that the expected time to liquidate this stock has marginally increased from 4 years in Q3 2020 to 4.2 years in Q4 2020. If sales continue its recovery path coupled with limited new supply for the next few quarters, the market is only expected to gain with attractive deals for homebuyers while delivering stable returns to developers.