It’s official. The pandemic downtrend in home buying, as everyone faced a sudden lockdown and was staring at an unforeseen future, is behind us. The luxury market in India’s real estate is back with a bang. The July-September quarter numbers have rebounded and this time around the recovery is led less by affordable housing and more by the premium, luxury, and the super luxe segments. The home is now a new haven trying to meet every family member’s needs of work from home, study from home, fine dining to fitness zones and entertainment, all rolled into one. The need for space and spacious homes has risen dramatically and the well-off Indians are rethinking the kind of lifestyle they want.
Our own experience at India Sotheby’s International Realty, of a sharp pickup in high value transactions in the Rs 5 crore plus segment starting in May this year, accelerating all the way into the festival season of October and early November. The trend that we see is firmly backed by India’s top developers.
In a recently-hosted webinar by India Sotheby’s International Realty, Tarun Mehrotra, Regional Business Head (North & East India) of Tata Realty, said, “The months of lockdown have impacted many Indian families psychologically, especially the high-flyers who had forgotten what it was to spend time at home. The home is now squarely back in focus with people realising that work from home is not a temporary situation, rather a long-term possibility. So, the focus on buying homes has made a comeback.”
The green shoots of recovery which started in Indian realty around May 2020 are now firmly in place. By the time September rolled in, the big industry players in the sector had gone on record to say that they have not only recovered their shortfalls, but they are almost at par with the sales figures of the first half of 2019.
Not only that, deal closures are also happening much faster, both in luxury apartment projects and large single family villas and homes, in some of the most coveted addresses of gateway cities like Delhi NCR, Mumbai, Kolkata and even second home destinations like Dehradun, Rishikesh, Goa and Alibaug.
Swaroop Anish, Executive Director (Business Development) of Prestige Group, said, “We are even closing a high value transaction of Rs 5 crore plus in one sitting which was unheard of pre-COVID! This is happening now with both NRI and domestic luxury buyers seeking exceptional projects and properties”.
In some markets like Mumbai, the slash in state levied stamp duty from 5% to 2% has worked wonders. According to property data and research firm PropEquity, the home registration numbers in Maharashtra which were at 1,10,000 units in January 2020 dipped to as low as 35,000-40,000 units in June 2020. By the month of October, the figures were up to 1,00,000-1,20,000 transactions.
Coupled with home loan rates which are now at multi-year lows, the luxe home buyer sees enough reasons to scout for great deals and offers from developers and in the secondary market.
The big question on everyone’s mind is, will the recovery continue? I believe it will. For a few reasons.
One, there is enough pent-up demand from home buyers. Many of them who have been fence sitters are now realising that they may not get deals as good as today, and interest rates as low. The reasons for deferment of purchase are dwindling. As are good projects and properties. Samir Jasuja, Founder & MD of PropEquity, put a spotlight on data of ready-to-move-in inventory, which is what most home buyers want today, “The total number of ready-to-move-in units in the top tier-1 cities is approximately 1,00,000 as of November 2020, and the absorption rate for that segment is roughly 45%. This means that the inventory of ready-to-move-in projects will be exhausted over the next one to one-and-a-half years. There has been no price appreciation over the last three to five years and the cost of construction has risen. By 2022, you could have a situation of demand for ready homes, exceeding supply and prices will start to rise again.”
The second reason for home sales to continue their strong trajectory is the economic recovery witnessed in recent months in the country. Recovery across different sectors has been much faster than what was earlier projected. From car sales to retail, demand pick-up, to highway toll collection, the bounce back is evident. People are less worried about their future earning capacity. If buyers are comfortable with their future cash flows and the property is within their reach, they will invest.
Another point to note is the rising demand from non-resident Indians (NRIs), one that we have witnessed at India Sotheby’s International Realty. The security of owning a liveable property in your home country is reinforced by the pandemic. This need coupled with the value depreciation of the Indian rupee (by almost 10 per cent) against the US dollar, has given NRIs a strong purchasing muscle for real estate in India.
Let us also accept, the return to the office looks almost impossible in the near future, with the virus still at large and COVID cases resurging not only in India, but in key geographies of Europe and USA as well. The home is where we will all have to be for a long time to come. Our primary wellbeing and lifestyle will be defined by owning a home of our choice.
COVID-19 has also pushed families who were renters, to look at owned accommodation. Many of them have realised there is a difference in treatment and rights offered to tenants and owners in large community projects. They are now more invested in ensuring they have place to call their own, with enough space and amenities.
All in all, is it the right time to buy premium and luxury residential property? It is. The sooner you purchase, the more options and freedom of choice you will have over the location, the quality, and the size. The properties that sell out the fastest are often the best-located ones.
(By Amit Goyal, CEO, India Sotheby’s International Realty)