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In a relief to developers, property sales across the major cities in India in the third quarter of 2020 increased by 34% compared to the previous quarter. The growth is being led mostly by the high volume of property sales in Mumbai and the NCR region. In fact, 29 percent of these sales were recorded in Mumbai while the Delhi NCR recorded another 22 percent.
This is evidently a sign of recovery from the sharp fall in sales which took place in the second quarter owing to the COVID-19 pandemic. The developers are receiving an increasing number of enquiring regarding the properties. NRIs are displaying a renewed interest in the Indian real estate sector. While some are looking for a safe investment option, others are end-users buying homes just in case if they have to return to India in the post-COVID period.
In a bid to revive the sales, the government had announced a number of reforms which made properties more affordable by decreasing stamp duty, lowering interest rates, etc. These, along with a number of other policies helped to boost consumer confidence and increase sales. This trend is expected to continue, although it would depend on future policies by the government.
In recent years, the unsold inventory of properties in the major cities has grown considerably. This was posing a major problem for the developers as lack of sales implies a shortage of cash inflows. However, the third quarter of 2020 saw a slight dip in the unsold inventory. The number of property sales recorded was higher than the number of new launches in the real estate sector from July to September. This contraction of the unsold inventory was recorded in all the seven major cities. Previously the unsold inventory of these cities combined included 459,378 properties, which fell to 457,427 at the end of the third quarter.
It might be noted that most of the sales continue to be recorded in the affordable segment and the mid-segment of the Indian real estate. While Hyderabad and Mumbai recorded the highest increase in property launches, the number of new launches fell in Bengaluru. In fact, it was only 80% of the number of property launches in this city around the same time last year. In order to cater to the demand in the market, several developers are focusing on affordable homes. Of the new units launched in the third quarter of 2020, 75% were priced below INR 1 crore.
Apart from the government initiatives, the developers are also coming up with various incentives, discounts and other deals to boost the sales. It is expected that this would lead to a steady revival of the real estate sector in India.
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