India Today|August 10, 2020
Narendra Sharma, 39, an employee with JSW Steel in Mumbai, had been hunting for a second home for some time when he learned of a new project by a reputed developer of affordable homes in Vasind, some 60 km from Mumbai. He booked an 855 sq. ft apartment at Vasind in April this year, and is expecting possession soon. He says that at Rs 25 lakh, the purchase was a good deal since it also brought him closer to JSW Steel’s factory, where he works. “There are ample open spaces, parks and a playground on the property, at no extra charge,” says Sharma, who took a loan from a private sector bank to fund the purchase.
The Covid-19 pandemic has played havoc with most business sectors, and real estate is no exception. This sector, which contributes 11 per cent to the country’s GDP, has witnessed significant changes in buyer behaviour in recent months as a result of the lockdown. One major change is an increasing preference for properties on the outskirts of cities, as in Sharma’s case. Driving this change are a clutch of factors, including affordability, a preference for home ownership over renting, an increasing number of marquee projects from reputed developers on the outskirts of major cities, a fall in home loan interest rates and a preference for greener, cleaner surroundings than those in cities. Several developers and consultants that India today spoke to confirmed that there has indeed been a change in buyer preferences when it comes to localities, apartment sizes, the facilities on offer and the price.
ON SHAKY GROUND
However, this is not to say that the Indian real estate sector is out of the woods, or that there is a demand for property on the outskirts of cities or in satellite townships significant enough to lead to an overall revival of the sector. Far from it—the sector is, in fact, still saddled with huge inventories and plagued by plummeting sales.
According to realty consultant JLL, at the end of March this year, the sector had 455,351 unsold units in the key cities of Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai and Pune, worth about Rs 3.7 lakh crore. Sales of residential units in the second quarter of the calendar year plummeted by 81 per cent in these cities—from 68,600 units in the second quarter of 2019 to just 12,720 units in the same quarter this year, according to a study conducted by Anarock, another property consultant. New launches have been even more severely hit, with a 98 per cent dip in the second quarter of this calendar year—with merely 1,390 units launched in these cities. Major developers say that home sales have suffered a 60 per cent hit year-on-year, with some developers seeing a demand erosion of as much as 70 per cent.
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August 10, 2020