Developers said that the overhang of subdued demand from last quarter of 2019 continued into 2020 and with the COVID-19 pandemic induced lockdown in March, the sector went from bad to worse.
“The migration of labours and disruption in supply of raw materials saw a stoppage in construction activities. On the back of government stimulus and RBI’s liquidity measures, there was some uptick in demand post the partial opening of the economy,” said Mohit Goel, CEO, Omaxe Ltd.
Developers feel that affordable segment will continue to grow on the backdrop of low interest rates.
“The market for affordable housing is robust, and in the coming months, there will be more movement. People have realized the importance of owning a home, and this feeling is going to persist. We are coming up with multiple projects, and the response that we are getting is an indication that the affordable housing segment will not face any problem,” said Pradeep Aggarwal, Co-Founder & Chairman, Signature Global.
While the first quarter was progressing at its usual pace, the lockdown derailed the system for a month or so.
The repeated extensions in lockdown made every reputed developer prepare for the new normal.
“This remote working culture limited a good number of activities to an extent, but it also helped us seek out alternatives which have now become long-term practices due to the flexibility they offer. Technology integration via virtual home tours, video conferencing with prospect clients, targeted digital campaigns, webinars are now a regular practice of our culture,” said Achal Raina, COO Raheja Developers.
Experts feel that the mid-segment housing may take 6-8 months of 2021 to bounce back to pre-COVID levels due to the reeling market.
“Our study showed that home sales were down 54 percent during the January to September period this year as compared with the corresponding period in 2019. However, sales started to recover from October onwards on account of pent up demand as well as a seasonal upswing in demand because of the festival season. In fact, sales were higher in October and November on a year-on-year basis in some cities like Mumbai and Pune, driven by stamp duty cuts by the Maharashtra government,” said Dhruv Agarwala, group CEO, housing.com.
Developers said that the increase in sales seen since October will gain further momentum in the coming months on account of low interest rates, stagnant housing prices and attractive offers by developers.
Demand in 2021 is likely to recover to 2019 levels and may even surpass it if there are no unforeseen negative events.
“Affordable housing has emerged as the most preferred segment with respect to the amenities offered by developers at reasonable prices. Affordable is also gaining interest from investors, specially in the metro cities like Gurugram, newly developing peripheral region of New Gurugram,” said Rajat Goel, JMD, MRG WORLD.
Some developers are witnessing upturn in buyer sentiment.
“Additional measures such as raising the income tax deduction ceiling on home loan interest should be considered to boost demand further, as rebound of realty is a critical factor in aiding overall economic recovery,” said Parag Munot, Managing Director, Kalpataru Limited.
Kanika Gupta Shori, COO and Co-Founder, Square Yards said that the sector came out of a nationwide lockdown with its housing sales falling over 80% in Q1 & Q2 2020, as compared to the same period last fiscal year.
“Realtors off-loaded surplus inventory with price corrections, attractive pre-payment plans and offers which along with proactive government initiatives, stamp duty cuts, and historically low interest rates translated into spectacular Q3 property sales, with affordable housing calling the shots, and most tier 1 markets touching 90% of pre-covid sales figures,” said Shori.
For the real estate sector, the year started with sluggish demand, regulatory restrictions and the resultant liquidity crisis with almost all the developers.
“However, with the year coming to an end, there is light at the end of the tunnel with demands improving, new infrastructure projects coming up in nearby areas, developer-friendly policies being announced by the Government, job situation improving and purchasing power of common man improving,” said RK Arora, Chairman Supertech Group.