The impact of the severe second wave of COVID that gutted the entire country in the months of April and May was visible in the number of residential units launched across the top six real estate markets. A quarterly drop of 41% was noted in Q2, 2021.
In keeping with the trends observed due to the adverse impact of the COVID-19 regulations and economic slowdown experienced across different sectors in the country, the count of new residential project launches also witnessed a downward trend pan India (top six cities). The number of launches registered a quarterly drop of 41% across the top six cities tracked in the Apr-June 2021 period. Bangalore, Pune, and Hyderabad contributed to about 70% of the total launches in Q2.
Even though slashed stamp duty charges, sustained low-interest rates, and shift of real estate entities to various digital platforms resulted in increased sales of residential units marking the revival of the real estate sector in Q1, 2021; Q2 panned out to be completely different. Amidst the uncertainties posed by the second wave of COVID-19, which had a devastating impact on all sectors, new project launches in the residential segment came to a sudden halt, crippling the growth rate that was gained in Q1.
The cautious behaviour of the consumers coupled with less availability of labourers due to migration and a huge inventory of unsold properties might also be some of the reasons for developers to abstain from launching residential projects in the April-June quarter, 2021.
City Trends
The Q-o-Q analysis of new launches recorded an individual dip of more than 20% for cities namely Hyderabad, Gurgaon, Mumbai, and Pune. However, Noida was the least affected, registering a mere 1% decline in the number of new launches.
Another finding which surfaced is that 66% of the total new launches in Q2, 2021 were spread across residential markets of Hyderabad, Bangalore, and Pune. The rise in the number of new launches in such cities can be attributed to the increasing buyer preference for “safer property havens” and the easing down of the compliance policies for developers by various concerned authorities in the past few months.
Though, if one takes a closer look at the distribution of new launches in different cities during Q2, 2021, it is reflective of the common notion that the newly developed or developing precincts usually receive the major share of the new launches. With North Hyderabad accounting for 93% of the new launches in the city and 95% of new residential projects in Gurgaon confined to sectors in New Gurgaon, this notion seems to be becoming a reality.
Q-o-Q comparisons further revealed that 68% more projects were launched in West Hyderabad in Q2, 2021 when compared to the Jan-Mar quarter. Whereas for Gurgaon, the New Gurgaon area recorded a 52% spike in the number of new launches as compared to Q1, 2021. With selected pockets of cities showing a hike in the number of new launches, it can be deduced that both developers and buyers can anticipate slow recovery of residential markets, but in a phased manner.
With the vaccination drive picking up pace in the past few months and life expected to return to some level of normalcy, buying sentiments are expected to remain positive for the remaining part of the year. This might also push up the number of new launches in H2, 2021.
