With the gradual reopening of the economy, investor sentiment towards the ailing real estate sector is slowly changing. With affordable home loans and moderation in property prices, the demand for residential units is expected to revive. Hence, the listed firms have started taking up the projects.
“In the festive season in H2FY22, listed developers have made multiple launches in Tier-1 cities,” said analysts at ICICI Securities Ltd.
For example, Mumbai-based Sunteck Realty Limited launched its second project, Sunteck Forest World, on 4 September at Vasind in Thane district. Big competitor Godrej Properties Ltd may launch four-five projects in the second quarter, two in the national capital region and one each in Bengaluru and Pune. In FY22, the firm has about 21 launches in line, spread over 13.3 million sq ft; This does not include its Bandra/Worli projects in Mumbai.
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Oberoi Realty Ltd is also targeting launches in H2 in Thane, Borivali, Goregaon and other ongoing projects as restrictions are further eased. Analysts say the exact timing and volume of the launch are awaited, but the company at least expects to watch ₹2,500 crore sales booking in FY22.
The strong demand confidence stems from recently published property registration data. According to analysts at IIFL Securities Limited, the August property registration data for Mumbai and Maharashtra indicates a complete recovery from the second Covid wave impact on industry volumes.
“The month of August saw property registration of 6,784 units (including primary and secondary sales) for Mumbai city, which was almost 16% higher (2 of 7.5%) as compared to 5,873 units registered in August 2019. year CAGR) and 2.5 times as of August 2020. 2,642 units sold. August 2021 was the first month, which shows sales/registration up to 5% after the resumption of stamp duty.” The report said that the % CAGR in the sale price in the next three years, the CAGR of the last three/five years at 9%/ significantly higher than 5%.
The Nifty Realty Index has gained 97 per cent in the last one year. Analysts say gains are picking up meaningful momentum post-Covid, largely on account of consolidation. Meanwhile, an improvement in property demand is expected to lead to a faster elimination of unsold inventory and consequently impact realty prices.
It should be noted that over the years, residential real estate prices in major cities have remained largely stagnant. Analysts say though property sales may pick up, but prices will rise in single digits and gradually, at best.
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