Realty sector sinks deeper into crisis this year; builders look to 2021 with hopes of demand revival
Only in October did the property market start seeing some traction, driven by pent up as well as fresh festive demand that got further consolidated towards trusted developers.
NEW DELHI: After a troublesome 2020, the country’s real estate sector sees 2021 as a year of recovery. The sector feels that the recent steps taken by the Reserve Bank of India (RBI) and the government in terms of reducing repo rate and slashing stamp duty will mitigate the impact of Covid-19 and play an important role in attracting buyers.
Amid lower interest rates and varied offers by developers, home sales at top seven cities touched nearly 50,900 units in Q4 2020, rebounding to nearly 86 per cent of the corresponding period in 2019, said Anarock Property Consultants in a recent report. For the full 2020, housing sales fell 47 per cent year-on-year to 1.38 lakh units across the seven cities.
“As far as the residential market is concerned, we are already seeing demand gradually returning, especially in the fourth quarter of 2020. We hope to see the momentum continue in the next year as well,” said Anurag Mathur, CEO, Savills India.
According to Anshuman Magazine, Chairman & CEO, India, South East Asia, Middle East & Africa, CBRE, a gradual improvement in sales across all segments is expected, although mid-income (Rs 45 lakh- Rs 1 crore) and budget (less then Rs 45 lakh) categories are expected to be the key focus areas among homebuyers and “are expected to perform relatively better.” Luxury realty developers also expect to see strong demand next year.
“While in the super luxury segment, in Q2 alone, we achieved sales close to Rs 350 crore. From June till date a total of 20 units of super-luxury housing project ‘The Camellias’ has been sold worth close to Rs 500 crore. And these are between Rs 25-50 crore. Going forward, we are optimistic of seeing a strong demand for homes in the luxury segment,” said Karan Kumar, chief marketing officer DLF.
According to Kumar, DLF's sales bookings in the first half of this fiscal crossed Rs 1,000 crore as sales in the second quarter rose sharply to Rs 853 crore from Rs 152 crore in the previous quarter, indicating a very quick recovery.
However, there still remain some major concerns.
"There are indicators that point towards recovery in the sector at a less than desired pace. The steps announced by the GOI and RBI mitigate the COVID-19 impact to a certain extent but do not address the prolonged problems of the realty sector which has been ailing due to the challenges created by an array of factors over the past few years," said Satish Magar, President, CREDAI National.
Mathur of Savills says that there is still a degree of uncertainty regarding subsequent waves of the pandemic, as seen in the rest of the world. "As a result, businesses and investors remain cautious about making big financial commitments. Secondly, we have seen significant damage to various sectors, like hotels and retail, which will take a long time to recover," he said.