Uncompleted residential apartments in Greater Noida, near New Delhi. Photo: AFP

India’s real estate sector, which came to a standstill during the countrywide lockdown, is showing signs of recovery, but it is still long way off from pre-Covid-19 levels.

A report by property consultant Knight Frank India, “India Real Estate – Residential and Office Update H2 2020,” states that housing sales fell in all eight major cities between July and December, despite a recovery in the run-up to the festive season. The top eight property markets sold about 94,997 residential units between July and December, a 19% year-on-year decline, while new launches stood at 86,139 new homes – a fall of 23% from last year, the report added.

However, during the October-December festive season the latent demand and lower home loan rates boosted sales. “The strongest movement in demand was seen in Mumbai and Pune markets, due to a limited-period 300 basis point cut in stamp duty rate by the Maharashtra state government,” said Shishir Baijal, chairman and managing director, Knight Frank India. Out of the total home sales number in H2 2020, Mumbai and Pune contributed around 50%, he added.

On a sequential basis, the eight cities witnessed growth of 84% in the final quarter, as against the third quarter. The Mumbai and Pune markets led the rally with growth of 193% and 143%, respectively.

With home loan rates down to a multidecadal low and property developers offering attractive payment terms, many buyers, especially those with sound financials, decided to take advantage. As people spent more time indoors on account of the pandemic, it spurred the demand for bigger and better houses. The need and desire to own houses that met buyers’ changing requirements influenced purchase decisions.

The report said that houses worth five million rupees and above constituted 57% of all sales in H2 2020, while it was 43% for the affordable category. It pointed out that this was because the buyers of affordable homes were more impacted by pandemic-related economic uncertainties. During the period there was a rise in transactions in the high-end category.

For the calendar year 2020, the sales of residential properties fell 37% to 154,534 units in the eight cities, as against 245,861 units in 2019. The fall in demand was the highest in Ahmedabad (61%) and least in Pune (18%). Mumbai saw a decline of 20%, Delhi (50%), Bangalore (51%), Chennai (49%), Hyderabad (38%) and Kolkata (21%).

Office space

The office market in the top eight cities also showed revival in the second half of this year after the government eased lockdown norms. The report said that in Q3 the gross leasing revived to 31% of the quarterly average of 2019, but surged to 115% in Q4 2020.

Bangalore witnessed a surge of 8% year-on-year in leasing activities to 7.5 million square feet in H2 2020. During Q4, Bangalore, Hyderabad, Pune and Chennai saw an unprecedented spike in volumes at 459%, 640%, 919% and 227%, respectively, as against the preceding quarter.

In terms of sectors, information technology was dominant with a share of 41% in H2 2020, followed by Banking Securities Finance and Insurance and manufacturing with 16% each, while other services and co-working sectors recorded 17% and 10%, respectively.