The ongoing pandemic has had a major impact on the residential property market in Mumbai, with sales declining by 45 percent and new launches falling by 47 percent in the period from January to June 2020.
The data was compiled by global real estate consultancy firm Knight Frank, which released its half-yearly report titled ‘India Real Estate: H1 2020’ on Thursday.
The report presents a comprehensive analysis of the residential and office market performance across eight major cities for the January-June 2020.
The second quarter has been a challenging period and almost a washout for both launches as well as sales, the report said.
Compared to H1 2019, residential sales in Mumbai declined by 45 percent to 18,646 units in H1 2020, and new launches were lower by 47 percent to 23,399 units.
Notably, in Mumbai, where property prices seldom move in any direction other than up, the weighted average prices declined by 3.3 percent year on year to INR 6,886 sq.ft in H1 2020.
While developers have not reduced quoted prices much to avoid larger implications on the project, many have started offering larger discounts to prospective customers on a one-on-one basis.
“In one-on-one negotiations on the table with the homebuyers, developers have been seen offering discounts up to 18 percent or even more in few cases,” the report said.
Further, to move the inventory, developers are offering many indirect offers like deferred payment plans, assured rentals, EMI waivers, subvention schemes, PLC waivers, and free clubhouse membership.
Additionally, instead of offering straight-up discounts, some have resorted to absorbing the GST and stamp duty charges to reduce the effective rates.
Residential units costing under Rs 50 lakh still account for 54 percent of total sales in H1 2020, in line with the prevailing trend, the report added.
“The impact of the lockdown has been severe on the residential sector, which was already facing challenges due to slower economic growth, erosion of end user’s financial confidence, and challenges of NPAs. The issues are further compounded for both the supply and demand side as lending activities have reduced as financial institutions have become extremely cautious in extending loans,” said Rajani Sinha, Chief Economist, and National Director, Research, Knight Frank India.
“Going forward, for the development side of the residential segment, the government’s proactive actions such as extension of subsidy schemes, reduction in stamp duty rates, one-time restructuring schemes and changes to FDI policy will be required for the sector to revive. While for the end-users to return to investing in real estate, the government would have to provide long term financial security through growth-oriented economic policies,” he added.Back to latest news