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CREDAI-MCHI, a body of developers in Mumbai, has pegged the drop in sales booking at around 80 per cent in the February-March period this year.
This is the second highest fall in residential sales in the past five years, after Q1, 2017, when the decline, due to the note ban, was 37 per cent.
"We did very few deals (sales) after the lockdown was announced. Who will come to do booking in these times,” said Niranjan Hiranandani, managing director of the Mumbai-based Hiranandani group, one of the largest developers in the country.
Hiranandani has online response teams, which are on the job in the residential properties space.
Another top Mumbai developer said he had seen a huge drop in sales since April 1.
“If the lockdown was not there, we would have done good sales during this time of the year,” he said.
Sandeep Runwal, director at the Runwal group, said the company had done sales online in Dombivali, Parel, and the Thane area of the Mumbai Metropolitan Region.
He said his firm was “pushing customers to look at their projects” and buy.
These are not isolated cases of drops in residential sales after the lockdown was announced in the country on March 24.
Developers of residential properties have seen sharp drops in the past 15-odd days and the rest of the year does not look rosy, say consultants.
CREDAI-MCHI, a body of developers in Mumbai, has pegged the drop in sales booking at around 80 per cent in the February-March period this year.
The March quarter of the current calendar year (Q1, calendar year 2020) saw about a 30 per cent decline in sales of properties in top cities, said property consultant JLL India.
This is the second highest fall in residential sales in the past five years, after Q1, 2017, when the decline, due to the note ban, was 37 per cent.
Bengaluru, which is the largest contributor to sales in Q1 2019, saw the highest decline in residential sales at 52 per cent in Q1 2020, JLL said.
According to PropEquity, a data analytics firm, home sales have come down 27 per cent in Q1 of 2020 and launches have come down 39 per cent.
Another brokerage, Anarock Property Consultants, has predicted that housing sales are set to see a drop of 25-35 per cent this calendar year while launches are set to come down also by 25-30 per cent.
“The issue is making people rethink on big buying plans. They will be in wait and watch mode,” said Sunil Rohokale, managing director and chief executive officer at ASK group, a Mumbai-based fund manager.
Rohokale said people would focus on their priorities like jobs, managing household budgets, monthly payments, and so on.
Developers are also sitting on a huge pile of unsold stocks.
Unsold inventories increased from 442,228 units in Q4 2019 to 455,351 units in Q1 2020.
Moreover, Mumbai surpassed the National Capital Region to become the market with the highest inventories, both in amount as well as value, JLL said.
Consultants such as Anarock said the affordable housing segment would be the most affected due to price sensitivity in the segment.
“As much as 40 per cent of the new supply added across the top seven cities in the past few years was in the affordable segment (units priced less than Rs 40 lakh).
"Resultantly, there is a huge under-construction supply of about 610,000 units in the affordable segment,” said Anuj Puri, chairman at Anarock.
Analysts such as Adhidev Chattopadhyay, research analyst at ICICI Securities, said developers with a strong balance sheet will weather the storm.
“The prospect of falling sales in ongoing projects and the deferment of upcoming launches threaten to become the next Black Swan for an already weak residential market.
"All developers in our coverage universe had a slew of residential launches lined up from Q1FY21 which may get deferred by 2-3 quarters,” Chattopadhyay said in a recent report.
Ramesh Nair, chief executive officer and Country head at JLL India, said supported by festive sales, residential sales were expected to see some traction towards the end of this year.
Photograph: Rupak De Chowdhury/Reuters
