COVID-19 second wave: Housing sales dip 58 per cent in top 7 cities

  

 Housing sales in top 7 cities in April-June quarter 2021 (in Units)

Cities	Q2 2021	Q1 2021	Q2 2020
NCR	3,470	8,790	2,100
MMR	7,400	20,350	3,620
Bengaluru	3,560	8,670	2,990
Pune	3,790	10,550	2,160
Hyderabad	3,240	4,400	660
Chennai	1,590	2,850	480
Kolkata	1,520	2,680	730
Total	24,570	58,290	12,740

Source: ANAROCK Research

 

The ferocious COVID-19 second wave has significantly slowed down the housing sales in the April to June quarter of 2021 compared to the January to March quarter of 2021 but top seven cities showed an 93 per cent increase over the April to June quarter of 2020, according to the latest report by Anarock Property Consultants released today.

Mumbai Metropolitan Region which had reported sales of 20,350 units in Q1 of 2021 – thanks to the 2 per cent stamp duty cut in Maharashtra – reported sales of just 7400 units in Q2 of 2021. However, compared to 3,620 units sold in Q2 of 2020, the sales were more than double. Pune sold 3,790 units in Q2 compared to 10,550 in Q1 of 2021 and just 2,160 in Q2 of 2020. Mumbai and Pune accounted for 46 per cent of the total sales of 24,570 units across top seven cities. The top 7 cities had sold 58,290 units in Q1 of 2021 indicating the extent of recovery from the 2020 national lockdown.

Meanwhile, despite localized lockdowns and restrictions due to the second wave, developers launched new projects (mostly digitally) and put approximately 36,260 units on the market across the top 7 cities. Hyderabad is the frontrunner in overall housing launches with approximately 8,850 units launched in Q2 2021  followed by MMR with 6,880 and Bengaluru with 6,690 units. The top 7 cities launched around 36,260 new units in Q2 2021 compared to 62,130 units in Q1 2021 - a decrease of 42 per cent Q-o-Q due to the COVID-19 second wave. In Q2 2020, a mere 1,400 units were launched across the top 7 cities.

Anuj Puri, Chairman, Anarock Property Consultants, said, “The second COVID-19 wave definitely impacted overall residential property market activity in the second quarter of this year when juxtaposed against the preceding quarter. However, compared to the corresponding period of 2020, the sector displayed remarkable resilience. To the backdrop of developers adopting technology in their businesses, there was a huge yearly jump in both new launches and sales. Importantly, the localized lockdowns and restrictions did not dent activity as much as the complete nation-wide lockdown last year.”

He observed that the listed developers increased their market share slightly compared to the smaller, unorganized developers during the second wave – from 40:60 earlier to 43:57 now. “Back in FY2017, the ratio was 17:83. The impact of the second wave was felt more intensely by smaller and unorganized players,” he said.

Puri said with downward curve of second wave, easing of restrictions across cities and vaccination drive gathering momentum, he expected residential housing demand to see steady growth in the next quarter. “The previously-noted structural shift in housing demand continues - many current homeowners seek to upgrade to larger homes and the previously purchase-averse millennials remain very active property buyers,” he said.

The slowing down of sales also led to a 2 per cent increase in unsold inventory in Q2 of 2021.  Unsold inventory increased from 6,41,860 units in Q1 2021 to approximately 6,53,540 units in Q2 2021.. However, the two major realty hotspots - MMR and NCR - saw their unsold stock decline by 6 per cent and 1 per cent respectively.

 

 

 

 

 

Rivali Park becomes first SWAMIH project to be completed

 Finance Minister Nirmala Sitharaman hands over possession virtually to home buyers

Finance Minister Nirmala Sitharaman on Thursday virtually handed over possession to homebuyers of CCI Projects’ Rivali Park project in Borivali, which was acknowledged as the first completed real estate project under the alternative investment fund Special Window for Affordable & Mid-Income Housing (SWAMIH) for stressed projects.

The SWAMIH fund was launched by Sitharaman in November 2019 to provide last mile funding to real estate projects starved of construction funding due to liquidity issues in the market. CCI Projects, a part of the Cable Corporation of India, was one of the four real estate developers from Mumbai Metropolitan Region to get approval for the last mile funding. Rivali Park Wintergreen is the Phase 1 of the project spread over 7 acres consisting 708 units ranging from 1 BHK to 4 BHK.

Addressing the virtual event, Sitharaman said she is very pleased to see that SWAMIH Fund has completed its first residential project. More so, it is an important achievement since the SWAMIH Fund has worked its way through the difficult period of COVID-19 pandemic, she added.

The Finance Minister said that the Government of India had stepped in to provide funding to the stressed affordable and mid-income housing projects thereby giving relief to the home buyers who had invested their hard earned savings. Smt. Sitharaman said the Government believes that once these homes are constructed and completed, a large amount of capital locked up in these projects will be released.

The Finance Minister said it will provide employment to construction workers and will provide impetus to the allied industries such as steel and cement. It will improve the portfolios of Banks and NBFCs and significantly improve the economic sentiment in the nation, she said. She was all praise for SBICap Ventures team for converting a policy announcement into an on-the-ground funding institution that has achieved significant progress within a short time span.

The virtual event was also attended by MoS Finance Anurag Singh Thakur, Ministry of Housing and Urban Affairs Secretary Durga Shankar Mishra, Secretary, Department of Economic Affairs Ajay Seth, State Bank of India chairman Dinesh Kumar Khara, SBI CAP Ventures Irfan Kazi, and CCI Projects director Rohan Khaitan.  

Khatau said SWAMIH fund approved Rs 180 crore funding for Rivali Park in February 2020 shortly before the national COVID-19 lockdown was announced and the project has used Rs 125 crore. He said his company was just starting the construction process in March 2020 when the lockdown was announced. He said thankfully the government allowed labour at construction sites if the developer organised facilities for them to live on site as per COVID-19 protocols. “We expanded capacity and deployed 600 workers on site. We had to create more space for workers to live on site, and follow COVID-19 protocols. We had medical checkups for the workers twice a week. We had 60 contractors and vendors working in close co-ordination. What was crucial was that SWAMIH’s objectives aligned with our objectives – which was giving homes to people,” Khaitan said.

“This is a remarkable milestone in our commitment towards delivery & handover of the Wintergreen phase to our customers, who have placed immense faith in us and our vision to create a holistic experience. We are very pleased and grateful to have traversed the last mile with timely financial aid and intervention from the SWAMIH Investment Fund. We have obtained Occupancy Certificates (OCs) for the entire project and have commenced the possession process that will help us deliver the promise of a dream home to our valued homebuyers,” Khaitan said.

 

Irfan Kazi from SWAMIH Fund said the investment fund had approved 204 projects in 41 cities for last mile funding which will benefit 1.16 lakh home buyers stuck in half complete projects possession of their homes. In the next one year, the fund will complete 26 projects which will ensure completion of 12,600 homes.

 

Asked what differentiates SWAMIH fund from other lenders, Kazi said the fund has a stringent scrutiny process that involves five third party analysis, and it provides complete funding without being dependent on sales and collections by the developer. “We provide enough finance to complete the project, and all funding is used only and only for construction and completion of the project. The fund takes a construction finance approach, not loan account finance. We also had a Project Management Company representative on site at Rivali Park who was doing daily reporting on labour movement, construction progress etc,” he said.

 

 

 

Maharashtra discontinues stamp duty rebate; developers disappointed

Mumbai Metropolitan Region developers expressed their disappointment after Maharashtra government refused to extend the ongoing 2 per cent stamp duty rebate on property registrations valid till March 31, 2021

Chief Minister Uddhav Thackeray, Deputy Chief Minister Ajit Pawar, and Revenue Minister Balasaheb Thorat met on Wednesday to review the decision. CREDAI MCHI, which represents over 1,800 developers from MMR, had submitted a memorandum to Thorat last week seeking an extension of the 2 per cent stamp duty cut by another 12 months as it would help not only the real estate sector, but provide impetus to the economic recovery since more than 250 allied industries are linked with the construction sector.

Though the government refused to extend the stamp duty rebate, it agreed to the developer’s demand to keep the Ready Reckoner rates unchanged for 2021-22. It also decided to continue to the 1 per cent stamp duty rebate for women property owners aimed at encouraging women to be co-owners in family property assets. The government resolution issued by the government laid down a condition that women who take the benefit of the stamp duty rebate cannot transfer the property to male co-owners for 15 years.   

Commenting on Maharashtra goverment's decision about non extension of reduced stamp duty and unchanged ready reckoner rates, Dr Niranjan Hiranandani - MD- Hiranandani Group and National President- National Real Estate Development Council (NAREDCO) said, "Maharashtra government has played a leadership role in rolling out revolutionary measures like stamp duty reduction to augment sluggish real estate market post-Covid pandemic crisis. The extension of this benefit would have played a catalytic role in keeping up the pace of sales and property registration momentum across the micro markets and different housing segments in the state.”

Hiranandani pointed out that the stamp duty rebate had also resulted in increased revenues for the government. “The proven data clearly reflected uptick in volume leading to increased state revenue in second half of FY20-21 and multiplier effect it draws on employment and GDP. Unchanged ready reckoner rates is good, but Industry expected reduction in ready reckoner rates to foster real estate transactions. Hence, NAREDCO requests the state government to kindly reconsider the decision, proving it to be a win-win situation for all." Last year, the Maha Vikas Aghadi government had reduced the ready reckoner rates marginally for Mumbai with little impact on market rates.

Reacting to the developments, Deepak Goradia, President, CREDAI MCHI said, “We are disappointed with the Maharashtra Government’s decision to not extend the stamp duty rebate beyond March 31. Given the current economic climate, the reduction in stamp duty charges not just galvanized homebuyer sentiments, but also enabled the industry to spearhead the state’s economic revival in the post-covid era as well. An extension would have ensured the sustenance of the sales momentum while providing the necessary support to one of the strongest economic pillars and employment generators in the country.”

Goradia said the industry would continue to look forward in continuing the dialogue with the government and make representations to convince the government to to resume the reduced 3 per cent stamp duty rates in the near future

“We are glad that the State Government decided on keeping the ready reckoner unchanged which reflects the market conditions more precisely. The move to provide a 1% stamp duty rebate to women homebuyers is also noteworthy and honours the crucial role and contribution of women towards homebuying,” he said.

The bold step by the Maharashtra government to cut stamp duty rates by 3 per cent till December 31, 2020, and by 2 per cent till March 31, 2021 had reignited the demand for homes that had touch its lowest point in April at the peak of the COVID-19 national lockdown. Maharashtra’s policy initiative was followed by neighbouring Karnataka too. Most developers were in favour of the government continuing with the stamp duty rebate.

Rohit Poddar, Managing Director, Poddar Housing and Development Ltd said “The stamp duty reduction has spurred the sales and registration in Maharashtra to an all-time high, assisting the government in generating more revenue than the actual rates would have yielded. To sustain the momentum, it is essential for the government to extend the stamp duty reduction till March 2022 which in turn would help in generating even more revenue while de-stressing the real estate sector, thereby bringing the economy back on the growth track at high pace.”

Pritam Chivukula, Co-Founder & Director, Tridhaatu Realty and Secretary, CREDAI MCHI said "The State Government's decision to discontinue the stamp duty benefit will be a huge distress for the homebuyers who would have decided to buy their dream home but couldn't do so because of the severe impact of the pandemic. We had requested the Government to extend the stamp duty benefit for atleast a year so that more and more buyers could fulfill their wish of buying their home. We will continue to urge the Government to reconsider their decision and extend the stamp duty benefit further in interest of the homebuyers."

According to international property consultants Knight Frank India, after the stamp duty rebate was announced on August 26, the property registrations have grown incrementally month on month with a staggering 75,688 units registered between September 1, 2020 and March 24, 2021. Home sales achieved its highest ever mark in December 2020 with 19,581 units registered, and a 111 per cent increase over December 2019 registrations. In the run-up to March 31 deadline, the Inspector General of Registrations had clocked nearly 17,000 registrations in March, an increase of 234 per cent over March 2020.  

The Knight Frank India report also pointed out that from September 1, 2020 till March last week, the city exchequer had collected Rs 2578 crore in revenue from apartment sales which was a substantial increase over Rs 1756 crore worth revenue collected between January to August 2020 period.  

Shishir Baijal, Chairman & Managing Director, Knight Frank India said, “The reduction in stamp duty rate has helped mitigate the pain in the long-beleaguered real estate sector of Mumbai. As expected, with the revival of the economy, the sales momentum grew stronger in Q1 2021 and the euphoria amongst homebuyers continued despite the 100-bps increase in stamp duty rates. A combination of lowest home loan rates, reduced house prices along with rebates and payment flexibility offered by developers, as well as increased household saving rates, have provided the right growth environment for the residential segment to grow.” 

Residential home sales recover by 90 per cent in Q1, 2021: JLL report

 Residential home sales in the first quarter of 2021 have recovered by over 90 per cent of the pre-COVID levels across top seven cities and new launches witnessed a 27 per cent jump over Q4 2020, according to JLL Residential Market Update - Q1 2021 research report.

The report said 25,583 residential units were sold in Jan-March quarter of 2021 compared to 27,451 units sold in Jan-March quarter of 2020. Mumbai showed a recovery of 84 per cent compared to pre-COVID levels with 5,779 units sold in this quarter compared to 6,857 in Q1 of 2020. Neighbouring Pune, however, has recovered fully and clocked 3,745 unit sales in this quarter compared to 3,728 units sold in Q1 2020.

Barring National Capital Region and Bengaluru which 92 per cent and 57 per cent recovery compared to pre-COVID levels, Chennai, Hyderabad and Kolkata showed Pune-like over 100 per cent recovery, the report said. 

Sales volume increased across most markets

	Q2 2020 (in units)	Q3 2020 (in units)	Q4 2020 (in units)	Q1 2021 (in units)	Growth (%) Q1 2021 over Q4 2020
Bengaluru	1,977	1,742	2,535	2,382	-6%
Chennai	460	1,570	2,500	3,200	28%
Delhi NCR	2,250	3,112	4,440	5,448	23%
Hyderabad	1,207	2,122	3,570	3,709	4%
Kolkata	481	390	438	1,320	201%
Mumbai	3,527	4,135	5,026	5,779	15%
Pune	851	1,344	3,323	3,745	13%
Total	10,753	14,415	21,832	25,583	17%

Mumbai includes Mumbai city, Mumbai suburbs, Thane city and Navi Mumbai

Source: Real Estate Intelligence Service (REIS), JLL Research

 

“The sustained growth in sales presents clear signs of demand and buyer confidence coming back to the market. This has been on the back of historically low home loan interest rates, stagnant residential prices, lucrative payment plans and  freebies from developers and government incentives such as the reduction of stamp duty in states like Maharashtra and Karnataka (for affordable housing). The ease of lockdown restrictions and the commencement of the vaccination drive have further aided in bringing buyers back to the market,” said Dr. Samantak Das, Chief Economist and Head Research & REIS, JLL.

“In the fourth quarter of calendar year 2020, India’s economy returned to growth territory, recording a 0.4% rise in GDP. In tandem with the GDP growth, the pace of recovery in the residential market intensified with sales increasing by 51% when compared to the previous quarter. In Q1 2021, sales of residential units continued an upward trajectory. Sales, at the overall level, increased by 17% on a sequential basis,” he added.

Delhi NCR witnessed the maximum new launches jumping up from 699 units in Q3 of 2020 to 2,244 in Q4 and 4,734 units in Q1 of 2021, an increase of 111 per cent. Mumbai, which not only enjoys the 2 per cent stamp duty rebate but also 50 per cent reduction in premium costs announced by the Brihanmumbai Municipal Corporation, also saw new launches jump from 2,294 units in Q2 of 2020 to 4,616 units in Q1 of 2021, a jump of 43 per cent over last quarter. Pune also witnessed a 57 per cent increase in new launches. Across seven cities, the new launches shot up from 14,780 in Q2 of 2020 to 33,953 units in Q1 2021. The focus in new launches remained squarely on affordable housing with 69 per cent of the new launches in the sub Rs 1 crore category homes, the report said.

“The Government is committed to boost affordable housing. The recent Union Budget has extended the benefit of additional interest deduction on home loans for first-time homebuyers in the affordable segment. Further, there is a time extension to claim the tax holiday on profits from affordable housing projects until March 2022. The housing loan going below 7% for the first time in the last decade also triggered sales in all segments in the residential real estate. The buoyancy in the market manifested in the form of low mortgage rates and stable prices are expected to continue and attract fence-sitters and serious end users,” said Siva Krishnan, Managing Director, Residential Services (India), JLL

The report pointed out that the COVID-19 pandemic has decisively shifted the home buyer’s focus in favour of established developers. Cautious home buyers are giving increase preference to developers with sound execution capability, transparent business operations and offering quality products.

The report said the residential market will continue to be a “buyer’s market”. Though home prices have remained largely stagnant across all seven cities, in some markets, developers continue to offer attractive freebies like stamp duty rebate, no EMIs for 12 months and payment schemes to woo the fence-sitters into the buying decision.