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Residential sales on the upswing, yet to reach pre-demonetisation levels
The market sentiment might have not been very optimistic in the past few months, but the real estate sector has successfully weathered the storms of policy interruptions and economic downturns.
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migrator
migrator
Chennai
According to Dr Samantak Das, Chief Economist and Head of Research & Real Estate Intelligence Services (REIS), JLL India, the top three metropolitan cities of Mumbai, Delhi and Bengaluru have been the major focus of real estate activities. “The city level analysis shows that Chennai registered its highest ever sales penetration since 2014 in the first nine months (January-September) of 2019 at 33 per cent. All other cities have registered an uptick in the January to September period of 2019 as compared to the same period last year except Bengaluru.”
Research shows that Hyderabad is catching up fast. The city topped the list with a 36 per cent sales penetration followed by Pune at 34 per cent. Hyderabad has been gaining traction both on the residential and commercial front along with large potential for investments. On the other hand, Delhi registered the lowest sales penetration rate at 13 percent followed by Kolkata at 17 per cent. Pune has been the most stable city followed by Bengaluru. But the situation has not been like this always. Demonetisation brought a big disruption in the sector.
The impact of demonetisation
Das believes that demonetisation disrupted the sector for a considerable period of time. However, the impact was not all pervasive. Kolkata and Hyderabad took the maximum hit, falling from 28 per cent to six percent and from 29 per cent to nine percent, respectively. Pune was resilient along with Mumbai and Bengaluru.
Where are we now?
Chennai, Pune and Hyderabad showed strong revival in sales along with other cities limping back to pre-demonetisation levels. It is remarkable to note that while Hyderabad was one of the worst-hit cities, it has not only recovered from the slumps but also crossed the pre-demonetisation level and had the highest sales penetration level out of all the cities in the first nine months of 2019. Mumbai, however, is the only city that has not yet shown any signs of recovery.
It is not that bad after all!
In this backdrop, we see the short-term adverse impact of demonetisation gradually fading away. Moreover, the market participants: homebuyers, developers and investors have made peace with unprecedented reforms such as RERA and GST. The office market, which is a strong indicator of the residential sector performance has also been on a sustainable growth path. We hope that the year 2020 will fare better than 2019 for the residential sector, thereby outlining its future growth trajectory.
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