According to JLL, sales of residential units during the first half of current calendar increased by 22 per cent compared to the corresponding period in 2018. In the first half, 78,247 units were sold in seven major cities of the country. According to another property consultant, Knight Frank, residential market saw growth in the first half mainly due to the volumes generated in the affordable housing segment that has seen a host of incentives under the government’s “Housing for all by 2022” programme.
“The Indian real estate market has also shown tangible signs of stability, as developers have been reconciling to the new normal since the implementation of the RERA and GST and increasing supply gradually,” says Shishir Baijal, Chairman and Managing Director, Knight Frank. During the first quarter this year, the government lowered Goods and Services Tax (GST) rates on affordable homes to 1% from the earlier 8%, without input tax credit. GST on projects under construction, which are not under the affordable housing segment, was reduced to 5% from 12%. Real Estate (Regulation and Development) Act 2016 (RERA) have now been notified in most states and union territories.
According to JLL, developers focused on delivery of already launched projects and new launches of residential units decreased by 11 per cent on a y-o-y basis across the top seven cities like Delhi NCR, Bengaluru, Mumbai, Kolkata, Chennai, Hyderabad and Pune. “Keeping in mind the large unfulfilled demand from mid and affordable segments, maximum launches were witnessed in this category across the key cities,” the report says. Prices remained stable across key locations as developers kept a check on supply and focused on delivery of existing projects.
Developers continued to capitalise on the demand and supply side incentives of the Government, to cater to the unmet demand in the lower and mid income groups, the JLL report has pointed out. A closer analysis of launches during H1 2019 showed a sizeable proportion of new supply in the affordable and mid-price segment (up to Rs one crore in Mumbai and Rs 75lakhs across other cities) which stood at 58%. These launches were mainly concentrated in the peripheral areas of the cities which enjoy the advantages of lower land cost and availability of larger land parcels.
City specific data shows that while Mumbai, Bengaluru and Delhi NCR accounted for more than 60 per cent of the total sales Hyderabad saw the highest growth in sales during the first half of 2019. Most of the growth was witnessed in the peripheral areas of key cities.
Interestingly, office space market was constrained more because of the lack of supply rather than any slack on the demand side, unlike the residential segment, saw over 2.2-mn sq.m get delivered in the first half of the current calendar.