www.99acres.com MUMBAI RESIDENTIAL MARKET UPDATE APRIL - JUNE 2020 Market Sentiment INSITE 99acres India’s No.1 Property Portal FROM CBO’S DESK A drastic drop in the number of new providing some relief from the residential launches and poor sales volume COVID-19-induced crisis. After some defined the ‘real’ story of residential setbacks, the traffic and responses on realty across metro cities in Apr-Jun 2020. 99acres returned to pre-COVID levels by Shortage of construction workers, liquidity the end of June 2020. A survey by 99acres constraints faced by developers and the revealed that 75 percent of its registered withdrawal of homebuyers impacted market buyers now prefer shortlisting or buying sentiment adversely. a property through real estate portals. Further, 60 percent of the participants Delhi NCR, Mumbai and Hyderabad lost averred that they would prefer undertaking the largest share of new launches and a virtual tour before physically visiting the reported a dip of 80-95 percent, each, project site. QoQ. Cumulatively, the period witnessed an addition of a mere 1,400 units in the Nonetheless, to witness a complete revival, top eight metros. The ensuing credit the industry would need more support from crunch with both buyers and developers the Centre beyond measures such as home is expected to shrink housing sales from loan moratorium and declaring COVID-19 as four lakh units in 2019-20 to 2.8 lakh units a Force Majeure event to witness revival. in 2020-21. While all metro cities reported status quo in average weighted capital prices, experts foresee average ‘asks’ in the resale segment dipping by an average of 10-15 percent in the months to come. To sustain businesses, several developers Maneesh Upadhyaya underwent digital transformation with Chief Business Officer virtual project launches and e-site visits 99acres.com INSITE : Mumbai 3 COVID-19 AND NATIONAL REAL ESTATE OUTLOOK HOME BUYING SENTIMENT Home buying sentiment remained muted during April due to the nationwide lockdown; with enquiries picking up slight pace in June. Genuine homebuyers flocked the market looking for attractive schemes and discounts. NRI demand, too, resurged, with some conversions in the mid-income housing bracket across cities. IMPACT ON INDUSTRY The COVID-19 crisis disrupted the supply chain of realty raw materials, and led to reverse migration of labourers and fund constraints PROPERTY PRICES at developers’ end. The sector went through a major digital While the negotiation window widened up to 10-15 percent transformation as developers shifted online to market their projects across budget segments, any actual correction in prices was and engage with customers, and Government bodies, such as NCLAT not noticed. Barring Delhi NCR, all metros maintained status and RERA started addressing homebuyers online. quo in average weighted capital ‘asks’, QoQ. With wafer-thin The Apr-Jun 2020 quarter saw the lowest number of new launches margins at the hand of developers, any price correction in since 2013 and sales remained 75 percent lower than the previous future is unlikely. quarter. Invoking of Force Majeure brought some relief as ongoing projects got up to a nine-month extension under Real Estate (Regulation and Development) Act, 2016. The suspension of Insolvency RENTAL LANDSCAPE and Bankruptcy Code (IBC) for a year, too, is a relief for developers. Amid restrictions to move around, the rental market remained intact in Apr-Jun 2020. There was no movement in average ‘asks’ across cities, except for some discounts and IMPACT ON HOMEBUYERS leeway offered by property owners to support the tenants With ongoing projects delayed by at least six months, homebuyers struggling financially. PG accommodations and guesthouses expecting possessions received a setback. Job losses and pay cuts took the brunt as people moved to their hometowns due to affected the paying capacity of homebuyers, who shelved their buying an extended lockdown. decisions in the wake of market uncertainties and expectations of price cuts. While reduced home loan interest rates from most banks make it an opportune time to invest in real estate, a large share of prospective SUPPLY homebuyers await more clarity in the ensuing months. New project launches remained nil during the quarter and progress on ongoing projects suffered on account of reverse The extension of the Credit-Linked Subsidy Scheme (CLSS) under migration of labourers and disruptions in the supply chain. Pradhan Mantri Awas Yojana (PMAY) might be a benefit for those Property owners unwilling to sell at a reduced price exited looking for affordable homes. Existing homeowners welcome home from the secondary market. Unsold inventory stood at 6 lakh loan moratorium of six months announced by the Government in April. units at the end of Apr-Jun 2020. INSITE : MUMBAI 5 99acres INSITE : Mumbai 5 India’s No.1 Property Portal MARKET MOVERS Infrastructure projects regain momentum The Environment Ministry’s go-ahead to the 701 km-long Mumbai-Nagpur Highway that would pass through 10 districts, 26 talukas and 392 villages bodes well for the realty market of Mumbai and the areas around. Besides, the resumption of construction work on the nine metro corridors is also a significant relief as alongside improving connectivity; the new links would uplift realty demand in neighbouring locales. Property registrations resume across the city Re-opening of the registration offices after a hiatus of about two months may restore the homebuying trend in the city. Along with Mumbai, registration offices in Pune and Nagpur have also resumed operations. Banks reassess the pending home loans In the season of layoffs and salary cuts following the COVID-19 lockdown, COMMERCIAL lending institutions are re-scrutinising the salary slips of home loan applicants to gauge their financial stability. The move may put homebuyers in soup, as either they may have to cancel their bookings or look for an REAL ESTATE alternate source of funding. OUTLOOK Digital land records cease to be official documents Online 7/12 extracts issued by the Aaple Sarkar centres will not be treated • Waivers in common maintenance charges, extension of rent-free periods and as official documents for land transactions. Given the increasing number of up to 25 percent price reduction helped improve sentiment in the commercial online frauds, the State government has passed the decree to protect the title leasing segment for bigger floor plates of 30,000-40,000 sq ft. of land for investors in Maharashtra. • Office transactions declined by over 40 percent in Apr-Jun 2020 vis-à-vis Jan-Mar 2020. This indirectly benefitted the co-working sector in and around Thane, where players pre-leased co-working spaces for the ensuing quarters. • Companies scaling down their operations due to revenue losses in the lockdown period preferred small Grade A spaces between 1,000 sq ft and 5,000 sq ft. • The only major deal materialised in the city was by Vrihis Properties in BKC at Rs 490 crore. Besides, Elomatic-Pharmalab and a couple of other shipping companies in Andheri and Goregaon shifted their base to Belapur due to its proximity to JNPT Port and relatively lower lease rates, i.e. around 99acres Rs 50-60 per sq ft. India’s No.1 Property Portal INSITE : Mumbai 7 * Capital values represent quarterly change * Rental values represent yearly change * Supply is basis properties listed on 99acres.com MUMBAI’S REALTY AT A GLANCE Property Rental Prices ‘Asks’ Price movement in key micro-markets Localities Apr-Jun 2020 QoQ YoY Rental % Change % Change Yield Dombivli (East) Rs 5,010 - 5,900 -2% -2% 3% Demand Supply Kalyan (West) Rs 5,550 - 6,500 0% 3% 3% Virar Rs 4,430 - 5,130 0% 2% 2% Panvel Rs 5,950 - 7,010 -1% 4% 2% Mulund Rs 15,110 - 17,440 1% 2% 3% Kharghar Rs 7,820 - 9,220 0% 1% 2% * Property prices represent quarterly change * Rental ‘asks’ represent yearly change * Supply is basis properties listed on 99acres.com * Demand is basis queries received on 99acres.com Badlapur Rs 3,410 - 3,980 0% 1% 2% Goregaon (East) Rs 14,660 - 18,060 -1% 2% 3% Vasai Rs 4,970 - 5,690 0% 1% 3% Kandivali (West) Rs 13,260 - 16,150 0% 0% 3% * Average ‘ask’ rates have been calculated as per listings posted on 99acres.com ** Rental Yield has been calculated for a 1,000 sq ft apartment INSITE : Mumbai 9 99acres DEMAND & SUPPLY India’s No.1 Property Portal DYNAMICS MUMBAI METROPOLITAN REGION 99ACRES’ 22% OUTLOOK Over two months of lockdown, unchanged circle rates 29% and job losses collectively impacted the home buying sentiment in Mumbai in Apr-Jun 2020. While enquiries gradually increased to about 50 percent of the pre-COVID-19 times at the end of June 2020, sales 43% remained low key. The city witnessed over 70 percent drop in the quarterly property sales volume. 48% Developers struggling for sustenance abstained from announcing new projects and focused on disposing of their existing residential units. Barring a few project launches by Grade A developers, including Lodha 23% Developers, Godrej Housing, Hiranandani Group, Runwal Group and L&T Realty, the majority of builders deferred their expansion plans. Technology disruption took the industry by storm. From generating enquiries to e-site visits and last-mile delivery, builders massively relied on 35% technology to market their projects. The average capital values across Mumbai, Thane and Navi Mumbai remained stable, QoQ. However, rental prices reeled under pressure due to limited supply of ready homes in the city and restriction from residential Demand Supply societies towards relocation. While home rents in Mumbai did not report any hike, YoY, the same dipped Affordable Housing in Thane by a percent in Apr-Jun 2020, as against (Within Rs 40 lakh) Apr-Jun 2019.