It looks like the real estate sector has come out of the woods as it completed the tumultuous financial year of 2020 and transitioned with an uptick in sectoral momentum into 2021. The sector is slowly leaving behind its hardships including piling unsold inventory, liquidity crunch and last-mile funding, thanks to some fiscal yardsticks that have caused a ripple effect in the sector.
If we take a closer look at the happenings of the real estate sector, we will find that the demand for real estate is stable, though year-on-year comparison is still favourable. In Tier 1 cities, new launches have continued to take a dip in Feb’ 21 (down 18% Y-Y), while absorptions rose by 13% Y-Y after a 3% decline in Jan’ 21. The unsold inventory across markets also took a dip by 11% Y-Y at 33 months from 29 months in Feb’20.
Overall, the home buying sentiments are ripe as favorable policies injected into the sector translated into record sales with property registrations hitting new highs in Feb’21. A strong recovery across property markets is in the offing which can be seen in the real estate boom in MMR.
Mumbai on a flourish
The limelight is rightly on Mumbai at present as property sales saw a stratospheric rise and registrations hit new records. Compared to March 2020, where only 3,798 units were sold, a year on we saw an approx. 4x increase with 12,696 units. Sales in March 2021 grew 234% Y-Y. Property registrations recorded a 365% Y-Y jump from 3,798 deals in March 2020 to17,681 deals in March 2021. The euphoria among homebuyers has grown stronger with the stamp duty cut, low home loan rates, reduced home prices along with payment schemes offered by developers. Also, the stamp duty cut has helped the long-beleaguered real estate market in MMR to overcome its inhibitions and mitigate the pain.
Vaccination drive helps shift gears
The vaccination drive conducted by the government, high infrastructure spending, enhanced consumption, favourable demand, and a growing sense of asset ownership, has turned the winds in favour of the real estate sector. It has helped real estate markets to shift gears to accelerate the sales momentum. Cities like Bengaluru saw a drop in unsold inventory and a rise in absorption rates. Pune and Hyderabad stood out reporting a 25% and 19% rise in absorptions. New launches were down though in these cities which helped in clearing out unsold inventory.
Poised for explosive growth
With India’s economic outlook looking bright, the real estate sector will spin its own growth story. The outcome of various policies unleashed by the government has done its job, boosting confidence in the economy. Homeownership which was a dream a year ago has become a necessity for reasons of safety and security. Millennials and first-time homebuyers are ditching rental living and going for spacious homes that come with good amenities. While incentives like interest subvention schemes, deal sweeteners by developers, reduced stamp duty, low-interest rates, will continue to allure fence-sitters and turn them into homebuyers, they will also act as a catalyst for the real estate sector to grow exponentially.
The real estate sector is on a roll in 2021. The property market has staged a handsome turnaround in its fortunes and recovered at a much faster clip than expected. Homebuyers and investors continue to feel confident about investing in future homes as prices remain stable and the overall outlook remains positive. There is an organic demand in the market driven by the desire to own a home and it is expected that this demand will stand firm even if the discounts and offers are withdrawn.
