Second Wave Puts A Lid On Home Sales, Project Launches

The recovery in home sales and project launches has sharply slowed down due to the second covid wave, as homebuyers stayed away from site visits and postponed transaction closures.

In states such as Maharashtra, which has India’s most valuable property market, the Mumbai Metropolitan Region (MMR), the withdrawal of the stamp duty waiver had added to a drop in property registrations in April.

Developers and real estate consultants expect the sudden slump in home sales to continue but expect a recovery in the latter half of 2021.

“We expect home sales to see a 25-30% drop in the April-June quarter. Until the second wave, sales in the last few months were driven by stamp duty waiver and pent-up demand. With the second wave, the impact will be significant,” said Pankaj Kapoor, founder and MD, Liases Foras Real Estate Rating & Research Pvt. Ltd.

The top eight property markets across India saw a 32% growth in home sales in the January-March period compared with the preceding quarter, according to Liases Foras’ report in April. A total of 69,697 units were sold during the period.

Mohit Malhotra, managing director and chief executive officer (MD&CEO), Godrej Properties Ltd, said the second wave would create a disruption for 3-4 months in the residential market though the long-term outlook remains strong.

“There was significant volume growth post the lockdown last year and we believe that will continue in the long-term,” he said.

However, developers were also expecting that the recovery would also lead to a rise in property prices, given that home prices have remained stagnant for many years now.

“We need sustained volume growth for a couple of quarters before one can realistically expect price hikes to happen. Whenever that happens, there will be sharp hike. But for now, any price hike would likely happen next year,” he added.

Given that the sales momentum would remain low for a few months, some developers have started postponing project launches to the latter half of the year.

Sanjay Dutt, MD&CEO, Tata Realty and Infrastructure Ltd (TRIL) said online sales are on while it has closed down the sales experience centres temporarily due to the lockdown restrictions.

“We saw our highest ever sales in 2020-21 and the January-March period was the best-performing quarter. We expect similar momentum in 2021-22 though there would be a shortfall in our June quarter sales,” Dutt added.

TRIL, like many other developers, is monitoring the current crisis and trying to keep construction sites open. However, it has decided to push some projects that were expected to launch in the first half of the year, to the second half.

“There was huge pent-up demand up until March and there are enquiries still, but the second wave would have a severe impact on sales. Fence-sitting is back as homebuyers are taking time to take decisions,” said Vinod Menon, founder and CEO, Citrus Ventures, a Bengaluru-based real estate developer.

Mani Rangarajan, group chief operating officer, Housing.com, Makaan.com and PropTiger.com, said the recent outbreak of second wave of covid-19 and semi-lockdown in many states may put the brakes on the revival of the housing demand seen during the last nine months.

“Though it is too early to assess the impact, we need to keep in mind that real estate industry is more prepared this time to handle the situation. The sector has taken a giant leap in adoption of digital tools for marketing and sales during the last one year,” he said.

(Source: Livemint)