In Q4 2019, the Indian real estate sector seemed to enter a settling phase, wherein the market failed to pick up, but there was little to no scope for de-growth. Property sales were largely restricted to ready and low-cost housing units even as enquiries surged for under-construction and premium homes. The looming liquidity crisis of the developers kept buyers wary of incomplete projects. Property enquiries spiked in the festive month of October, but sales nose-dived by 20 percent QoQ, and stood at about 55,000 units across metros. Property prices, too, maintained status quo across prime cities such as Delhi NCR, Mumbai, Chennai and Pune. The rental landscape remained upbeat with all metros reporting an upsurge in average ‘asks’ by 2-4 percent, YoY.
realty at a glance
The Oct-Dec 2019 quarter continued to reel under the remnants of the crisis faced by the Non-Banking Financial Companies (NBFCs). Resultantly, new launches dipped by about 10 percent across metro cities. While Mumbai, Bangalore, Chennai and Kolkata reported a decline of 25-30 percent in new project additions in Oct-Dec 2019, as compared to Q3 2019 (CY), Delhi NCR clocked a 20 percent dip. The overall impact reflected in the reducing number of unsold units across cities. Currently, the unsold stock across the eight metros stands at 6.55 lakh units, down by a marginal one percent, QoQ.
The next prime challenge in the face of real estate developers is that of completing the 4.58 lakh stalled units across 1,500 odd projects. While the Government’s aid of Rs 25,000 crore to revive these projects came as a relief in the studied quarter, it did little to boost sentiment in the short-term.


The slowdown in the Indian residential real estate segment led by sluggish housing demand, liquidity constraints following the NBFC crisis and high unsold inventory kept home buying sentiment subdued in the last quarter of 2019. Resultantly, barring the IT-driven cities of Pune and Hyderabad, property sales plunged below the pre-demonetisation era across metro cities, despite the festive season kicking in with lucrative discount deals. Average weighted capital prices, too, remained unchanged across cities such as Delhi NCR, Mumbai, Pune and Chennai. Bangalore, Hyderabad, Kolkata and Ahmedabad reported a marginal one percent positive price movement in Oct-Dec 2019 vs the previous quarter.

Continued restriction on new launches reflected the gravity of the ongoing liquidity crisis, which may take a few more quarters to settle. Majority of the new supply in the market this quarter came in the form of re-launched projects. There was an increased emphasis on the completion of stalled or delayed projects as the Government pushed the agenda by introducing stress funds worth Rs 25,000 crore. Roping in its construction arm, National Building Construction Corporation (NBCC) Limited, to take up more projects in Delhi NCR was another step in the direction. The current worth of projects stalled across the country stands at Rs 4.5 lakh crore.

Affordable housing will continue to be the flag-bearer for triggering an improvement in the consumer sentiment in the forthcoming quarters. However, the prevalent demand-supply conundrum seems unlikely to be bridged in the short-term. Additionally, a potential price correction amidst piling inventory too seems to be driving the wait-and-watch approach amongst homebuyers. Currently, across the top eight cities, the inventory overhang stands at 30 months. Mumbai Metropolitan Region (MMR) alone accounts for an unsold stock of 2.20 lakh units at the end of the quarter ending December 2019, one percent lower than Jul-Sep 2019, closely followed by Delhi NCR with 1.77 lakh, and Pune with 92,000 unsold units.

The Oct-Dec 2019 quarter saw increased Governmental intervention towards giving a fillip to the realty sector. From the introduction of stress funds to urging banks for passing on the benefit of reduced repo rate to home loan borrowers, there was an increased focus on giving a new rigour to home buyer sentiment in the longer run. While property sales and new project launches took a back seat this quarter, the rental demand inched up, making way for the emergence of coliving spaces. The prime challenge that now remains in the face of the growth of both capital and rental markets is the absorption of unsold stock of over 6.55 lakh housing units across the top eight metro cities.

new launches