In the July-September quarter (Q2FY21), the residential segment displayed a strong recovery and continued momentum is likely to aid overall cash generation. The reopening of the economy is likely to boost the retail and hospitality segment, albeit gradually.
Low home loan rates and discounts/ attractive offers for residential homes have pushed sales velocity in the current quarter. Even while the volumes are yet to catch up to the pre-Covid levels, the spurt has been instrumental in perking up sentiments, according to a report by Knight Frank.
Meanwhile, on November 12, Finance Minister Nirmala Sitharaman announced a new set of stimulus measures to boost the sector. The government announced relaxations in income tax rules to allow the sale of primary residential units of up to Rs 2 crore values below the circle rate. Till now, only a 10 per cent difference between the circle rate and the agreement value was allowed.
This measure will reduce hardships faced by both home-buyers and developers and help in clearing the unsold inventory. The additional Rs 18,000 crore spending under Pradhan Mantri Awas Yojana (PMAY) will help funding for stuck housing projects.
“With the softening of prices across markets, this price difference was in excess of 10 per cent in some cases which kept some of the home buyers at bay. The move will certainly help the real estate sector liquidate inventory as it brings more home buyers to the fore, the impact will be limited as unsold inventory is highest in Mumbai and NCR markets
where properties values are higher than Rs 2 crore,” said Sharad Mittal, CEO & Head, Motilal Oswal Real Estate.
Rajani Sinha, Chief Economist and National Director – Research, Knight Frank said, “With the economy unlocking, macro-economic parameters have started improving. Real estate sector has also started bouncing back in line with overall pick-up in the economy. Supply, as well as demand parameters, have improved for the real estate sector and that is getting reflected in the improvement in the stakeholders’ sentiments. Pick-up in demand and supportive measures from Reserve Bank of India (RBI) and the government have aided in the revival of sentiments for the sector.”