Is worst for India's Covid-hit realty sector over?

The worst seems to be over for India's realty sector, especially in the residential property space, at least going by the two latest studies by two of the leading property consultancy and research firms. Consider this. Residential sales in Q2 (April-June) 2021 increased by 83 per cent as compared to Q2 2020, across the top seven cities. According to JLL's Residential Market Update - Q2 2021, sales were driven by the low base effect, less stringent lockdowns, and accelerating vaccination drives during Q2 2021, demonstrating improved resilience in the market. By comparison, in Q1 2021, sales of residential units continued an upward trajectory, increasing by 17 per cent on a sequential basis.

During the first wave of Covid-19, residential sales dropped by a record 61 per cent quarter-on-quarter to 10,753 units in Q2 2020. However, the impact of the second wave has been limited with sales in Q2 2021 dipping by 23 per cent to 19,635 units.

Similarly, in a recent report released by PropEquity, India's leading real estate data, research and analytics firm, home sales rose by 23 per cent across top 7 cities in India in the first five months of 2021 to 1,32,818 units versus 1,08,199 units in the first five months of 2020. Majority of the sales happened till Apr-15.

Bengaluru, Chennai, Hyderabad, MMR, and Pune are the cities where home sales witnessed a growth in first five months of 2021 versus first five months of 2020 at 16 per cent, 40 per cent, 39 per cent, 29 per cent and 34 per cent respectively. Only Kolkata and NCR witnessed downfall of 11 per cent and 20 per cent respectively in home sales during the same period. The residential sector displayed improved resilience in Q2 2021 when compared to Q1 2021. There is no denying the fact that the second Covid-19 wave dented the market following a good recovery curve. However, the impact was muted when compared to the same period last year. Most of the changes observed in the sector have been structural in nature and demand for homes is only expected to increase, sector analysts and realty players hope.

The year 2020 was certainly a difficult year for the real estate sector in India. This year, however, began with a solid recovery across segments and markets, but the sudden Covid wave again impacted the momentum due to the lockdown. As restrictions lifted around the beginning of June, the sector is now again witnessing housing sales, new launches and business in general slowly getting back on track.

Sales of more than 45,000 residential units were recorded in H1 2021 as against 38,204 units in H1 2020, an increase of 18 per cent Y-o-Y. The sustained levels of residential sales present clear signs of demand and buyer confidence coming back to the market. The need for secured tangible assets and aspirations to own larger homes as remote working becomes the new norm is driving sales of residential properties across the country.

As the infection and Covid related deaths have fallen significantly, leading major cities are expected to relax Covid related restrictions. The vaccination drive has also picked up pace and hopefully there will be limited impact from the third wave. Little wonder therefore that the leading players in the field believe that the worst is behind them.