Residential sales surge by 83% year-on-year in Q2 2021: JLL

Mumbai, July 05, 2021: Residential sales in Q2 (April-June) 2021 increased by 83% as compared to Q2 2020, across the top seven cities. According to JLL’s Residential Market Update – Q2 2021, released today, sales were driven by the low base effect, less stringent lockdowns, and accelerating vaccination drives during Q2 2021, demonstrating improved resilience in the market.

By comparison, in Q1 2021, sales of residential units continued an upward trajectory, increasing by 17% on a sequential basis. During the first wave of COVID-19, residential sales dropped by a record 61% quarter-on-quarter to 10,753 units in Q2 2020. However, the impact of the second wave has been limited with sales in Q2 2021 dipping by 23% to 19,635 units.

First COVID-19 wave impacted residential sales more

City	Q1 2020 (in units)	Q2 2020 (in units)	Growth (%) Q2 2020 over Q1 2020	Q1 2021 (in units)	Q2 2021 (in units)	Growth (%) Q2 2021 over Q1 2021
Bengaluru	4,186	1,977	-53%	2,382	3,500	47%
Chennai	2,453	460	-81%	3,200	600	-81%
Delhi NCR	5,941	2,250	-62%	5,448	2,440	-55%
Hyderabad	3,027	1,207	-60%	3,709	3,157	-15%
Kolkata	1,259	481	-62%	1,320	578	-56%
Mumbai	6,857	3,527	-49%	5,779	5,821	1%
Pune	3,728	851	-77%	3,745	3,539	-6%
Total	27,451	10,753	-61%	25,583	19,635	-23%

Mumbai includes Mumbai city, Mumbai suburbs, Thane city and Navi Mumbai

Source: Real Estate Intelligence Service (REIS), JLL Research

Sales of more than 45,000 residential units were recorded in H1 2021 as against 38,204 units in H1 2020, an increase of 18% Y-o-Y. The sustained levels of residential sales present clear signs of demand and buyer confidence coming back to the market. The need for secured tangible assets and aspirations to own larger homes as remote working becomes the new norm is driving sales of residential properties across the country.

Healthy offtake of residential units in H1 2021 despite challenges

City	H1 2020 (in units)	H1 2021 (in units)	Growth (%)
Bengaluru	6,163	5,882	-5%
Chennai	2,913	3,800	30%
Delhi NCR	8,191	7,888	-4%
Hyderabad	4,234	6,866	62%
Kolkata	1,740	1,898	9%
Mumbai	10,384	11,600	12%
Pune	4,579	7,284	59%
Total	38,204	45,218	18%

Mumbai includes Mumbai city, Mumbai suburbs, Thane city and Navi Mumbai

Source: Real Estate Intelligence Service (REIS), JLL Research

Siva Krishnan, Head – Residential, India, JLL said “Development focus on mid and affordable segments continued in H1 2021 with 72% of the new launches in the sub INR10 million category. Moving ahead, while the focus on these price segments is expected to continue, developers are likely to consider new launches of larger-sized apartments in order to capture changing consumer preferences,”.

“Homebuyers have also become even more cautious in affecting their home purchase decisions. Today, as most prospective buyers start their search online, the more established developers with good online presence and immediate brand recall benefit. Also, there is an increased preference and willingness to pay a premium for projects by developers with an established track record,” he added.

Mumbai has consistently been the largest contributor to sales over the past five quarters. In H1 2021, Mumbai accounted for 26% of the total sales. Furthermore, Delhi NCR, Pune, and Hyderabad followed, each contributing 15% or more.

Mumbai – Sales in the city were driven by Navi Mumbai and Thane which accounted for more than 50% of the total offtake during H1 2021.

Delhi NCR – Noida accounted for nearly 50% of the sales during the first half of the year.

Pune – North East (Viman Nagar, Kharadi, Wagholi) and North West (Hinjewadi, Wakad, Baner) accounted for 74% of the sales during H1 2021. Hyderabad – the offtake of residential units in H1 2021 was driven by Western Suburbs (Gachibowli, Manikonda, Kukatpally, Miyapur, Nizampet) with a contribution of more than 67%.

Hyderabad – The offtake of residential units in H1 2021 was driven by Western Suburbs (Gachibowli, Manikonda, Kukatpally, Miyapur, Nizampet) with a contribution of more than 67%.

Dr. Samantak Das, Chief Economist and Head Research & REIS, India, JLL said “The residential sector displayed improved resilience in Q2 2021 when compared to Q1 2021. There is no denying the fact that the second COVID-19 wave dented the market following a good recovery curve. However, the impact was muted when compared to the same period last year. Most of the changes observed in the sector have been structural in nature and demand for homes is only expected to increase. The RBI is expected to hold policy rates at the existing historically low levels, while prices will remain mostly range bound. The resultant affordable buoyancy will continue to attract fence sitters and serious homebuyers,”.

“If the downward trajectory in COVID-19 cases is sustained, the sector is expected to make a healthy recovery in the second half of 2021,” he added.

New projects launched despite restrictions and lockdowns

	Q1 2020 (in units)	Q2 2020 (in units)	Growth (%) Q2 2020 over Q1 2020	Q1 2021 (in units)	Q2 2021 (in units)	Growth (%) Q2 2021 over Q1 2021
Bengaluru	11,576	6,135	-47%	5,469	4,833	-12%
Chennai	2,574	182	-93%	5,036	392	-92%
Delhi NCR	3,021	–	-100%	4,734	1,048	-78%
Hyderabad	2,949	5,034	71%	8,591	10,980	28%
Kolkata	2,098	–	-100%	583	206	-65%
Mumbai	11,743	2,294	-80%	4,616	6,143	33%
Pune	6,613	1,135	-83%	4,924	3,455	-30%
Total	40,574	14,780	-64%	33,953	27,057	-20%

Mumbai includes Mumbai city, Mumbai suburbs, Thane city and Navi Mumbai

Source: Real Estate Intelligence Service (REIS), JLL Research

The top seven cities under consideration witnessed new launches of 27,057 units in Q2 2021, a decrease of 20% Q-o-Q. As the second COVID-19 wave intensified, several developers deferred new launches and focused on the completion of under-construction projects and clearing their existing inventory. Nevertheless, compared to the same period last year, new launches almost doubled. Despite states imposing lockdowns of varying intensities, developers launched projects across the seven cities.

On average, new launches of more than 35,000 units were witnessed every quarter between Q1 2019 and Q1 2020. In the COVID-era (Q2 2020 – Q2 2021), this has decreased to ~23,000 units. New launches are expected to go up in H2 2021 as developers launch new projects to monetise their land banks. Moreover, a reversal in trends with developers launching larger sized houses and apartments to capture the changing preferences of consumers in the post-COVID era is also possible believes JLL.

The first half of 2021 witnessed new launches of 61,010 residential units, a jump of 10% over H1 2020. Hyderabad continued to dominate new launches and accounted for almost a third of the overall launches during H1 2021. Mumbai and Bengaluru, which contributed 18% and 17% respectively to the overall new launches followed.  The markets of Hyderabad, Delhi NCR, and Chennai witnessed a substantial increase in launch activity in H1 2021 when compared to the same period last year.

Unsold inventory increases marginally

City	Q1 2021 (in units)	Q2 2021 (in units)	Growth (%) – Q2 2021 over Q1 2021
Aggregate (7 cities)	470,750	478,172	2%

Top 7 cities include Delhi NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Pune, and Kolkata

Mumbai includes Mumbai city, Mumbai suburbs, Thane city and Navi Mumbai

Source: Real Estate Intelligence Service (REIS), JLL Research

As new launches outpaced sales in Q2 2021, unsold inventory at various stages of construction across the seven markets under review increased marginally from 470,750 units to 478,172 units. Mumbai, Delhi NCR, and Bengaluru together account for nearly 70% of the unsold stock. An assessment of years to sell (YTS) reveals that the expected time to liquidate this stock has increased from 4.6 years in Q1 2021 to 5.2 years in Q2 2021.

Prices expected to remain range-bound

Residential prices in a majority of India’s residential markets have remained stagnant in the past few years. In Q2 2021, prices remained largely stagnant when compared to the previous quarter, across all the seven markets under review. Developers in certain markets have been providing moderate price discounts, attractive freebies including payment schemes such as no Equated Monthly Installments (EMI) for a year to boost sales. Prices are expected to be largely range-bound across most of the markets in the short to medium term.