The real estate sector should be back on its feet in the fourth quarter, predicts ANAROCK

The nationwide lockdown imposed due to the unprecedented COVID-19 pandemic has impacted business gravely and the real estate sector has been one of the worst-hit. It has been a watershed half-year and economic activities are at their lowest levels leading to several business closures.
ANAROCK Property Consultants recently (June 29) released a comprehensive ‘H1 2020 Pan India Residential Real Estate Round-up Report’. The report includes a detailed study of top seven cities of the country (where affordable housing refers to units priced less than ₹40 lakh) and details sale of new projects, unsold inventory and upcoming projects.
Pan India Residential Real Estate
PAN India refers to these top 7 cities. Courtesy: ANAROCK Property Consultants
New property launches
As per the report, the national lockdown imposed since the last week of March has adversely affected the real estate sector. The first half of 2020 saw a decline in the supply by 56 per cent as compared to the second half of 2019.
Read: The best countries to invest in real estate right now
The second quarter of 2020 was the most impacted quarter as new property launches were the lowest since 2013, supply declined by 97 per cent over Q1 2020 and 98 per cent over the same period of 2019.
Pan India Residential Real Estate 1
Courtesy: ANAROCK Property Consultants
Sales
In spite of the current COVID-19 crisis, 57,940 units were sold and sales continued to exceed launches in H1 2020. However, the sales dropped by 49 per cent in the first half of 2020 as compared to the second half of 2019, as every city underwent contraction.
This city contraction range in between the range 46 per cent to 51 per cent across these top seven cities.
Pan India Residential Real Estate 1
Courtesy: ANAROCK Property Consultants
Unsold units
The unsold inventory in the country registered only a slight decline of 2 per cent in H1 2020 as compared to H2 2019. Overall, the sales continued to exceed new launches, which resulted in the reduction of unsold inventory.
Pan India Residential Real Estate 3
Courtesy: ANAROCK Property Consultants
Capital Values & Inventory Overhang graph. Courtesy: ANAROCK Property Consultants
Prices have remained range-bound in all the cities during the first half of 2020. Inventory overhang increased from 30 to 44 months in the last six months.
Ground report
The real estate sector has been experiencing a disturbance in the raw material supply chain, limiting its availability, giving rise to the overall cost. Shortage of labour too has been another challenge, which has halted the construction activities.
The looming fear of economic slowdown and the probability of job losses has resulted in weak consumer sentiment. Potential homebuyers are now apprehensive about the future of real estate projects considering the delays, which is reflected in their purchase decisions.
Read: Lodha real-estate group sold over 300 units in the lockdown, says Vinti Lodha
Key highlights
The township projects that account for only 5 per cent across the major cities are likely to rise in the future, as residents would prefer to work-live-play in a controlled environment.
Moving forward, in all likelihood, the design requirements may be altered as the demand for flexible homes that are capable of functioning as office and classrooms if required would rise.
The work from home policy is likely to find acceptance amongst Indian companies, which may lead to an increase in reverse migration of professionals. As a result, housing
demand may gain momentum in Tier-II and Tier-III cities.
Ray of hope
While the impact on the residential segment has been sky high, ANAROCK believes that the demand is likely to resurface during the second half of 2020. The festive season that falls in the last quarter of the calendar, may kick-off a revival cycle.

 

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