Real estate launches subdued due to Covid uncertainty; Affordable housing hardest hit

According to a report by Edelweiss Securities Ltd., new launches in the top seven cities fell to 46% on a month-on-month basis.

Real estate launches subdued due to Covid uncertainty; Affordable housing hardest hit

According to a report by Edelweiss Securities Ltd., real estate launches remain subdued for six months in a row in May due to the uncertainty of Covid-19. New launches in the top seven cities fell to 46% on a month-on-month basis.

Hyderabad and Pune gained 18-20% month-on-month in May, while MMR witnessed the highest decline of 17% month-on-month, followed by Chennai, Bengaluru, and NCR, which posted reductions ranging from 5% to 11% month-on-month. Kolkata remained stable, registering an increase of merely 3% month-on-month.

According to an analysis by ANAROCK Property Consultant, the pandemic has altered market trends in the Indian real estate sector. The affordable housing supply share has declined across the top seven cities. The report indicates out of 36,260 new launches across the top seven cities in Q2 2021, the affordable segment is priced around Rs. 40-80 lakh, contributing only 20% share.

The ANAROCK report stated, “Profit margins for affordable housing developers are razor-thin. It has become difficult for them to launch budget homes due to rising inflationary trends in basic input costs (cement, steel, labour, etc.), as increasing prices in this highly cost-sensitive segment are inadvisable at this time”, leading to a change in the strategy of private players.

Meanwhile, demand remains weak, resulting in a high level of unsold inventory. According to analysts, despite the fact that supply is decreasing, real estate players will find it difficult to offload existing stock due to low demand.

Source: Mint