January 17, 2021 10:49:40 pm
THE sales in realty sector is back to pre-Covid levels and affordability at an all-time high leading to rising prices and increase in share of top developers. This was revealed in the January 2021 edition of the bi-annual report of the Gera Pune Residential Realty, Pune.
This census-based study of the Pune Residential Realty Market in India is based on primary & proprietary research conducted by Gera Developments and covers all existing projects in a 30 km radius of the city centre, it was stated at at a press conference in the city, recently.
The performance of the residential realty sector in 2020 has been strongly impacted by the Covid-19 pandemic and consequent lockdowns, which brought activities in the industry to a standstill. Further, developers also dealt with labour shortages and incurred additional costs in light of the migrant crisis. However, despite the lockdown, the Pune residential real estate market seems to have climbed a wall of worry and has posted very encouraging numbers across the board, the report said.
“The impact is evident across all parameters. Sales are back to normal and are at par with pre-Covid levels. Average prices across the city have risen by 3.5 per cent. Inventory is the lowest in six years in both, absolute and percentage terms. Total number of projects have fallen by 15 per cent compared to five years ago, and number of new units launched has fallen by 40 per cent, which was expected. In the same period, projects launched in the premium plus (between Rs 5,721 and Rs 7,151 psf) and luxury (above Rs 7,151 psf) segments increased,” the report said.
As compared to 2019, prices have increased by 3.5 per cent in 2020. This rise is driven by a steep increase of 17.29 per cent in the prices of new projects during the pandemic year. Within new projects, homes with larger number of bedrooms, especially 3BHK, have seen their prices increase, which has further contributed to the rising prices, the report said.
Affordability for home buyers is at its highest in nine years, needing a 3.68x salary to buy a 1,000 sqft home. The index was marginally high at 3.79 in June last year and dipped to 3.68 by December. This has empowered more buyers to go to bigger developers and demand more quality, instead of approaching smaller developers in a fragmented market. This shift from many small developers to few big developers is leading to market consolidation, the report added.
The report said sales growth is back to pre-Covid levels.
The 6-monthly sales numbers for the July to December 2020 is at 44,709 units while in the same period last year, the number was 45,110. This indicates that beyond a negligible decrease, sales figures are back to pre-Covid levels. While overall sales in 2020 have dropped by 12.34 per cent compared to 2019, the drop has been largely confined to H1 2020, while H2 2020 has registered a recovery. Sales have barely been impacted in the 800+ sqft segment and have actually increased by 24 per cent in the 1,201 – 1,400 sqft segment, the report stated.
The research considered the top 20 developers in Pune in terms of brand name and repute. To ensure consistency and uniform comparison, the report has maintained the same list of developers over the past 5 years and then calculated what was their share in the last 12 months. The top 20 developers account for more than 1/5th of the sales volume seen in 2020.
While releasing the report, Rohit Gera, Managing Director, Gera Developments, said, “The year 2020, especially the first half, was a tough time for the residential realty sector. Seismic events have a tendency to change market dynamics and the pandemic and lockdown is no different. New launches crashed in the first half of the year on account of the pandemic. However, in the second half, new launches somewhat recovered, the bounce back of sentiment reflected in sales in the second half of 2020 being almost the same as the same period of 2019. The introduction of lesser new inventory though, has led to unsold inventory in number of units being at a 6-year low. Affordability is up by about 50% in the past 6 years. Increased affordability and reduced availability are a classical set up for prices to start rising.”
Gera said normally, this would be considered the beginning of a price rise cycle, however, developers are ready to bring in new supply. “This is compounded with the new development control rules that have been recently introduced by the state government where development potential has increased substantially and hence developers are back to the drawing board to redesign their projects – we expect that the same number of new projects will contain a lot more inventory in the near future.”
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