- Mumbai is the largest contributor to sales, accounting for 29% in Q3 2020
- Q3 2020 witnessed new launches of 12,654 residential units across the seven prime markets
- Hyderabad dominated new launches accounting for over 40% in Q3 followed by Mumbai at 20%.
- Unsold inventory in various stages of construction decreased from 459,378 to 457,427 units across the seven markets
Mumbai, NFAPost: India’s residential market was more active in Q3 2020 with sales increasing by 34% versus Q2 2020*, according to JLL Research.
Mumbai accounted for 29% of the total sales in the quarter, while 22% of sales was contributed by Delhi NCR. Growth in sales activity was also driven by stronger demand in Chennai, Hyderabad and Pune.
Sales volumes increased across markets
| Q2 2020 (in units) | Q3 2020 (in units) | Growth (%) – Q3 2020 over Q2 2020 | |
| Bengaluru | 1,977 | 1,742 | -12% |
| Chennai | 460 | 1,570 | 241% |
| Delhi NCR | 2,250 | 3,112 | 38% |
| Hyderabad | 1,207 | 2,122 | 76% |
| Kolkata | 481 | 390 | -19% |
| Mumbai | 3,527 | 4,135 | 17% |
| Pune | 851 | 1,344 | 58% |
| Total | 10,753 | 14,415 | 34% |
| Mumbai includes Mumbai city, Mumbai suburbs, Thane city and Navi Mumbai | |||
| Source: Real Estate Intelligence Service (REIS), JLL Research |
JLL India CEO and Country Head Ramesh Nair said JLL is feeling cautiously optimisitc about the residential market, driven by sales volumes in Mumbai and Delhi.
“A combination of favorable factors such as low mortgage rates, attractive prices combined with developers’ lucrative payment plans together reinforce the longer-term potential of the sector. For end users, the next 12 months are ideal to buy a house,” said JLL India CEO and Country Head Ramesh Nair.
JLL India CEO and Country Head Ramesh Nair said in the subsequent quarters, the translation of demand into sales will primarily hinge on enhanced consumer confidence, which in turn depends upon the continued implementation of progressive government policies amidst the gradual revival of the Indian economy at large.
NRI interest
Residential market activity is also being supported by renewed interest from NRIs in Q3 2020, resulting in more pent up demand in the market and increased enquiries received by developers.
JLL India Chief Economist and Head of Research & REIS Samantak Das said the further easing of lockdown restrictions and the upcoming festive season might help in bringing buyers back to the market.
“An assessment of years to sell reveals that the expected time to liquidate stock has increased from 3.6 years in Q2 2020 to 4 years in Q3 2020. While the residential space remains unpredictable, favourable supply dynamics could deliver potential upside for both homebuyers and developers in the medium-term,” said JLL India Chief Economist and Head of Research & REIS Samantak Das.
Mid and affordable segment
New launches were restricted with 12,654 units launched in the third quarter, a decline of 14% quarter-on-quarter. Developers focused on completion of under construction projects and clearing their existing inventory.
Hyderabad and Mumbai accounted for over 60% of the total new launches in the quarter. The drop in new launches was driven by Bengaluru, which witnessed a substantial decline of over 80% as compared to Q2 2020.
Development focus on mid and affordable segments continued in Q3 2020 with nearly 75% of the new launches in the sub INR 1 crore category. Moving ahead, the focus on these price segments is expected to continue with developers focussing to reap the benefits of strong pent up demand.
| Q2 2020 (in units) | Q3 2020 (in units) | Growth (%) – Q3 2020 over Q2 2020 | |
| Bengaluru | 6,135 | 1,074 | -82% |
| Chennai | 182 | 1,487 | 717% |
| Delhi NCR | Negligible | 699 | – |
| Hyderabad | 5,034 | 5,396 | 7% |
| Kolkata | Negligible | Negligible | – |
| Mumbai | 2,294 | 2,242 | -2% |
| Pune | 1,135 | 1,756 | 55% |
| Total | 14,780 | 12,654 | -14% |
| Mumbai includes Mumbai city, Mumbai suburbs, Thane city and Navi Mumbai | |||
| Source: Real Estate Intelligence Service (REIS), JLL Research | |||
Unsold inventory dips
Q3 2020 witnessed sales outpacing new launches as unsold inventory across the seven markets (Mumbai, Delhi NCR, Bengaluru, Hyderabad, Chennai, Pune and Kolkata) decreased marginally from 459,378 to 457,427 units. Mumbai and Delhi NCR together account for more than 50% of the unsold stock which are at various stages of construction.
| Q2 2020 (in units) | Q3 2020 (in units) | Growth (%) – Q3 2020 over Q2 2020 | |
| Aggregate (7 cities) | 459,378 | 457,427 | -0.4% |
| Top 7 cities include Delhi NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Pune and Kolkata | |||
| Mumbai includes Mumbai city, Mumbai suburbs, Thane city and Navi Mumbai | |||
| Source: Real Estate Intelligence Service (REIS), JLL Research |
Over the last few years, residential prices in most markets have remained stagnant. Developers have been operating with low margins and the chances of a significant reduction in prices is unlikely. In Q3 2020, prices remained largely stable across all the seven markets when compared to the previous quarter.
However, it is important to note that developers in certain markets are providing moderate price discounts to kickstart sales, thereby facilitating cash flows to tide over the crisis in the short term.
Moreover, developers are offering flexible payment schemes such as no EMIs for a year and other schemes to attract prospective homebuyers who pressed ‘pause’ in the last few months. This could be the first signs of a broader recovery of the residential market in the country.
NOTE: *The comparison pertains to only last two quarters since the current crisis has no parallel and has infused uncertainty which we have not witnessed in the past.
Professional service
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JLL is a Fortune 500 company with annual revenue of $18.0 billion in 2019, operations in over 80 countries and a global workforce of nearly 93,000 as of June 30, 2020. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated.
In India, JLL has an extensive presence across 10 major cities (Mumbai, Delhi NCR, Bengaluru, Pune, Chennai, Hyderabad, Kolkata, Ahmedabad, Kochi and Coimbatore) and over 130 tier II & III markets with a cumulative strength of close to 12,000 professionals.
Headquartered out of Mumbai, JLL is India’s premier and largest professional services firm specialising in real estate. Our services cover various asset classes such as commercial, residential, industrial, retail, warehouse and logistics, hospitality, healthcare, senior living, data centre and education.
