In the last five years, Mumbai Metropolitan Region (MMR), the most expensive real estate market in the country, and Pune witnessed a decline of 17% and 17.5% respectively in rates of residential properties. However, despite the disruption due to Covid-19, the impact on prices has been limited in the past year.
Historically, low rates of interest, the decline in prices, and discounts offered by real estate developers have made the two buyer’s markets, according to property experts.
Rajani Sinha, National Director & Chief Economist Research, Knight Frank India, said, “On paper, this price decrease exists. The price drop would be even greater if pricing discussions with developers and discounts were factored in.”
Between January and June 2016, the average price of residential homes in MMR, the most expensive residential market in the country, stayed at Rs 8,093 per square foot, down to Rs 6,750 per sq ft in January-June 2021. In Pune, prices have fallen from Rs 4,860 per sq ft in H1 2016 to Rs 4,010 in H1 2021.
As per the findings of the real estate consultants Knight Frank India's ‘India Real Estate January-June 2021’ report, there hasn't been much of a drop in pricing in the previous year, with MMR experiencing a 2% drop in H1 2021 vs H1 2020, and Pune, a 1.5% drop in the same period.
Meanwhile, despite its reputation as a fully investor-driven market, the National Capital Region (NCR) has seen little price volatility. This tendency might be explained by historically high unsold inventories and a larger number of distressed homes on the market. The price reduction in the previous five years has been approximately 4%, with rates in the NCR presently at Rs 4,165 per sq ft.
Over the previous five years, prices in Bengaluru, traditionally a buyer's market, have remained steady. In January-June 2021, the city reported a price of Rs 4,920 per sq ft, which is just 2.3% more than the price of Rs 4,805 per sq ft in the same period in 2016.
Hyderabad, another southern city, appears to be becoming a real estate hotspot. Over the previous five years, the market has experienced a 30% gain in prices, fuelled by strong demand and a pick-up in commercial and office real estate, which is bolstering momentum in the residential real estate segment. In Hyderabad, prices are expected to be approximately Rs 4,720 per sq ft in H1 2021, compared to Rs 3,620 per sq ft in H1 2016.
“The market in Hyderabad is performing really well. It's been a few years since the anxiety surrounding the state's bifurcation has subsided, and the state government's supporting policies are reflected in the general residential momentum. Residential sales have also increased dramatically in Hyderabad, which is driving up prices,” Sinha added.
Between January and June 2021, the Indian real estate market had a 67% growth in residential sales, with 99,416 residential units sold across key markets. At the same time, new releases increased by 71% year over year to 103,238 units. Unsold inventory decreased by 1% over the same time last year as sales volumes stabilised, notably in the early half of H1 2021. Prices were mostly unchanged with a decline of 1% to 2% y-o-y, as per Knight Frank report.
Source: Financial Express