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Real Estate

Published on: Oct. 26, 2020, 11:25 a.m.
Real estate sees signs of turnaround
  • Yagnik: witnessing a good recovery; Photo: Sanjay Borade

By Arbind Gupta. Assistant Editor, Business India

The domestic property market is definitely showing signs of recovery, if one goes by the recently published reports for the third quarter of 2020. Knight Frank India, a leading international property consultancy, which has analysed the residential and office market performance across eight major cities, estimates that home sales volume jumped by 2.5 times to 33,403 units in Q3 2020, as against 9,632 units during Q2 2020.

And new residential unit launches have increased by 4.5 times to 31,106 units from 5,584 units in the previous quarter. According to the report, the total residential sales across these markets, during Q3 2020, reached 54 per cent of the 2019 quarterly average, while the residential launches improved to 56 per cent. 

According to Real Insight Q3 2020, a quarterly analysis of India’s eight prime residential markets by the leading online real estate brokerage firm PropTiger.com, residential home sales have aggregated to 35,132 units during July-September – an increase of 85 per cent over the previous quarter.  

On the office front, things have also improved significantly. The gross office leasing across these cities also witnessed a strong recovery, registering 80 per cent growth to 440,000 sq m in the third quarter, whereas the new office completions during the same period reported a recovery of 126 per cent to 330,000 sq m, over the Q2 2020 figures, says the Knight Frank India report.

“The real estate sector is witnessing good recovery with positive sales figures showcasing increasing demand in the market, with the overall sentiment being optimistic,” says Manju Yagnik, vice-president, Maharashtra Zone, National Real Estate Development Council (NAREDCO), and vice-chairperson, Nahar Group, Mumbai. She has attributed this improvement in the market scenario to various macro and microeconomic measures initiated by the Centre and state governments. 

“A combination of factors has boosted sentiments and therefore the overall demand,” adds Yagnik. “These factors include lending rates falling to a two-decade low and the RBI keeping the repo rate at 4 per cent (resulting in attractive home loan rates). The extension of the tax holiday under 80IBA till 31 March 2021, clubbed with reduction in ready reckoner rates by 0.6 per cent, the new tax slabs and the Maharashtra government cutting stamp duty to 2 per cent – all this has helped. Going forward, all these measures and the upcoming festive season, packed with offers and schemes by branded developers, will surely provide the market much-needed traction,” observes Yagnik.

According to her, the stamp duty cut is a direct stimulus for homebuyers to invest in real estate, as it reduces the cost of acquisition. The decision has rekindled the interest of the home buyer and developers in the state are seeing a greater degree of inquiries across their projects. “All our members are witnessing a renewed interest by buyers in their existing projects, and are lining up new launches to meet the demand,” affirms the NAREDCO (Maharashtra) vice-president. “We have already seen the impact of the state government’s decision with sales for September having crossed the Rs9,000 crore mark from Rs3,500 crore in August this year and Rs3,100 crore in June. Going forward, we expect a further pickup in demand.”

Taking various measures

NAREDCO, as an industry body, has been constantly in touch with the government, helping it to come up with various policy measures to deal with the challenges faced by the industry. “As an industry body, we need the support of the government for further tax relaxations, reduction in interest rates on home loans to customers, and reduction of interest rates to project loans to developers, among others,” explains Yagnik. “We are also looking at an extension of CLSS by one year, easing norms by the National Housing Bank for its Rs30,000 crore liquidity infusion facility; most recently the RBI revising its LTV norms will help banks lend more to the housing sector”. 

Yagnik is of the opinion that the Union government-backed alternate investment fund – SWAMIH – which has sanctioned as much as Rs12,000 crore towards last-mile funding to complete 123 stuck housing projects, is a long-awaited initiative and will help complete many stalled affordable and mid-income housing projects and thereby instill confidence in the minds of homebuyers. As of 5 October, final approval for investments of Rs4,197 crore in 33 projects has been granted by the fund. These 33 projects involve the completion of construction of 25,048 homes. SBICAP Ventures is entrusted by the government to manage this AIF.

Meanwhile, developers are repositioning themselves in the market keeping in mind current market conditions. Yagnik says that developers have increased their digital outreach to connect to those buyers who were used to the physical buying experience.

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