Home sales in Ahmedabad increases to 1,176 units; records launch of 1,451 units in Q3 2020: Knight Frank India
Hyderabad and Bengaluru witnesses weighted average price increaseof 4% YoY and 3% YoY respectively
October 2020:Knight Frank India, leading international property consultancy, today launched a special report – India Real Estate Update (July – September 2020) – which analyses the residential and office market performances across eight major cities for the Q3 2020period. The report estimates that home sales volume jumped by 2.5 times to 33,403 units in Q3 2020 compared to 9,632 in Q2 2020. New residential unit launches increased by 4.5 times to 31,106 units in Q3 2020, compared to 5,584 units in the previous quarter.
Weighted average prices in Q3 2020 registered a year – on – year (Y-o-Y) declined in the range of 3%-7% in six of the eight markets. Hyderabad and Bengaluru were the only markets that witnessed a price increment of 4% and 3% YoY respectively, as developers in these pre-dominantly end-user markets sustained pricing power in a favourable demand-supply scenario.
With developers innovating on their marketing prowess to include financial benefits, discount and easy payment options to attract buyers during the period of lockdown, sales have seen an uptick in Q3 2020 over the preceding quarter. Developers were also able to garner buyer interest through active usage of digital platforms during this period to engage with customers. Lower home loan interest rate also supported pick-up in residential sales. The acute labour crunch experienced in the earlier part ofthe lockdown also started to easeout, as workers began to return to main cities seeking employment. Even while there is a considerable distance from normality, the residential sector has started to show signs of improvement in Q3 2020.
As most of Q2 2020 (April – June) remained under lockdown due to the continuing pandemic, both sales and supply volumes saw record low levels in this quarter. Thus, to understand the market changes of Q3 2020 as compared to a regular period, Knight Frank India also evaluated Q3 2020 performance in terms of sales and launches to the quarterly average of 2019 (Pre- COVID levels).
The total residential sales of the top eight markets under review during Q3 2020, reached 54% of 2019 quarterly average. Similarly, residential launches in Q3 2020, improved to 56% of the 2019 quarterly average. Mumbai, Bengaluru and NCR accounted for 56% of the quarterly sales volume during Q32020 compared to 62% in 2019, primarily due to a fall in Bengaluru’s share in total sales for the same period. Kolkata was the only market that exceeded the quarterly average of 2019 in both parameters with sales and new launches increasing to 137% and 139% respectively compared to Pre-COVID levels, albeit on a low base.
While the average age of inventory stayed at 16.9 quarters in Q3 2020 compared to 16.2 quarters in the year-ago period, the developers focus on clearing the old stock has helped the market reduce unsold inventory levels to 0.44 mn units in Q3 2020, 1% less than a year ago.
TABLE I: SALES IN UNITS
| MARKET | 2019 QUARTERLY AVERAGE | Q1 2020 | Q2 2020 | Q3 2020 | Q3 2020 AS % OF 2019 QUARTER AVERAGE |
| Kolkata | 2,817 | 2,937 | – | 3,921 | 139% |
| Chennai | 4,240 | 2,981 | – | 3,085 | 73% |
| Pune | 8,202 | 7,813 | 2,235 | 4,918 | 60% |
| NCR | 10,707 | 5,446 | – | 6,147 | 57% |
| Mumbai | 15,236 | 15,959 | 2,687 | 7,635 | 50% |
| Bengaluru | 12,019 | 8,693 | 3,484 | 4,912 | 41% |
| Hyderabad | 4,067 | 3,808 | 974 | 1,609 | 40% |
| Ahmedabad | 4,181 | 2,268 | 252 | 1,176 | 28% |
| Total | 61,467 | 49,905 | 9,632 | 33,403 | 54% |
Source: Knight Frank Research
Shishir Baijal, Chairman and Managing Director, Knight Frank India, said, “There has been a meaningful improvement in sales and launches in Q3 2020. Developers have been focusing on liquidating inventory and homebuyers inclined to purchase ready assets has translated into reduced unsold inventory levels in this quarter. For markets such as Mumbai and Pune, the additional push by the state government in the form of reduced stamp duty has helped in demand generation and revenue creation for the state government. Going forward, the festival season will be crucial for developers. This may prove to be an opportune time for end-users with the adequate financial stability to make their investments. The near-term outlook on sales continues to depend on the speed and trajectory of recovery in the economy in the months ahead.”
Rajani Sinha, Chief Economist & National Director – Research, Knight Frank India said, “Strong demand stimulus like the one by the Maharashtra government and historic low home loan interest rates have been the key reason for the current uptick residential sales. These measures have compelled end-users, those looking for good deals for their property, to make their purchase decision. Developers also took the opportunity to make a strategic offer, especially on their unsold inventory, to support the sales velocity.”
TABLE II: LAUNCHES IN UNITS
| MARKET | 2019 QUARTERLY AVERAGE | Q1 2020 | Q2 2020 | Q3 2020 | Q3 2020 AS % OF 2019 QUARTER AVERAGE |
| Kolkata | 1,414 | 858 | – | 1,934 | 137% |
| Chennai | 2,886 | 3,520 | – | 2,547 | 88% |
| NCR | 5,726 | 1,422 | – | 4,110 | 72% |
| Pune | 11,165 | 12,650 | 785 | 6,721 | 60% |
| Bengaluru | 8,443 | 8,963 | 1,843 | 4,720 | 56% |
| Ahmedabad | 2,872 | 2,102 | 525 | 1,451 | 51% |
| Mumbai | 19,953 | 22,388 | 1,011 | 8,389 | 42% |
| Hyderabad | 3,374 | 3,002 | 1,420 | 1,234 | 37% |
| Total | 55,831 | 54,905 | 5,584 | 31,106 | 56% |
Source: Knight Frank Research
TABLE III: AVERAGE YOY PRICE CHANGE ACROSS MARKETS DURING Q3 2020
| MARKET | PRICE CHANGE YOY |
| Chennai | -7% |
| Pune | -5% |
| NCR | -5% |
| Kolkata | -3% |
| Ahmedabad | -3% |
| Mumbai | -2% |
| Bengaluru | 3% |
| Hyderabad | 4% |
Source: Knight Frank Research
KEY HIGHLIGHTS OF RESIDENTIAL MARKET SUMMARY Q3 2020
- Sales in Mumbai, NCR, Pune, Chennai and Kolkata,reached or exceeded 50% of average quarterly volumes in 2019.
- Second only to Mumbai in terms of average sales, Bengaluru sales in Q3 2020 at 41% of the 2019 quarterly average.
- Mumbai, Bengaluru and NCR accounted for 56% of the quarterly sales volume during Q3 2020 compared to 62% in 2019, primarily due to a fall in Bengaluru’s share in total sales for the period.
