Real estate activity seen picking up in June post second wave; new supply shows 74% surge: PropTiger report

National, July 6, 2021:  With most states announcing relaxations in travel movements amid a dip in the number of daily new infections, the month of June has seen a pick-up in demand in real estate, shows a recent report by leading online property brokerage firm PropTiger.com.

According to the report titled Real Insight (Residential) – April-June (Q2) 2021, half of the sales in the April-June quarter of 2021 took place in June itself as states started to open up and remove restrictions.

While demand and supply both remained adversely impacted during the first two months of the quarter, a period when most states remained in partial lockdowns to contain the virus spread, home sales and new launch numbers started to pick up in June, with the gradual lifting of restrictions, the report by the Gurugram-headquartered real estate advisory firm points out.

“Due to the challenging situation during the April-June quarter in 2021, when infections and casualties caused by the coronavirus hit a peak before subsiding towards the end of May, both demand and supply were hit during the first two months when most states put in place various restrictions and lockdowns to curb the spread of the virus. However, some ground on both the numbers was covered during the month of June, when states started to open up. The same is reflected in Q2 demand and supply numbers. We expect improvement on both these indicators of residential real estate health in the upcoming quarters since India’s vaccination programme is likely to gather pace. It’s also important to mention that despite the lockdowns and subdued sentiment, the government gave the sector a much-needed boost with the passing of the Model Tenancy Act which is expected to give a fillip to the much-needed rental housing supply in the country. The RBI is also doing its bit by continuing to maintain its accommodative stance, keeping the repo rate and reverse repo rate at a status quo of 4% and 3.35% respectively, which in turn would allow the low mortgage interest rate regime for homebuyers to continue. All these measures, combined with latent demand, will certainly help our sector to bounce back faster than what was anticipated earlier,” says Dhruv Agarwala, Group CEO, Housing.com, Makaan.com & PropTiger.com.

“While the impact of the second wave of the virus was universal, some markets were impacted more as they were the hardest hit by the second wave of the pandemic. This has been reflected in the high levels of unsold inventory and higher inventory overhang in markets like the NCR and MMR. This is especially true of the NCR market, where the inventory overhang is as high as the MMR even though the unsold stock in that market is less than half of what is there in the MMR,” says Mani Rangarajan, Group Chief Operating Officer, Housing.com, Makaan.com & PropTiger.com.

New supply remains resilient amid second wave; shows 74% surge YoY in Q2 2021:

The economic uncertainty caused by the second wave of the coronavirus pandemic has forced real estate developers in India to adopt a more cautious approach towards spending, which is reflected in new supply numbers for the April-June period (Q2) of CY 2021.

In the three-month period that saw dramatically high numbers of infections and fatalities caused by the virus spread, supply of new apartments in India’s eight prime residential markets witnessed a decline of 59% when compared to the January-March period of this year, the report shows.  A total of 21,839 new units were launched in these markets during Q2CY21. However, when compared to the same period last year, new launches show an increase of 74%.

This remarkable increase in launches in Q2 over the same period the previous year could be explained by the fact that during a large period of Q2CY2020, India continued to remain under a national lockdown that adversely hit the economy, forcing Asia’s third-largest economy to slip into recession in 2020. This forced liquidity-starved real estate builders in the country to tread highly cautiously during April-June 2020.

Affordably priced housing continues to be the key focus area for India’s real estate developers, and this is evident from the fact that majority of the new supply was concentrated in the mid-segment. In fact, 35% of the projects launched in Q2 were in the Rs 45-75 lakh price bracket shows the report.