The real estate sector was hugely affected due to demonetization. The sales of the residential houses witnessed an all-time low. But the market is slowly recovering as the sales the residential homes in the top 8 markets of India in the time period of October-December have raised by 28% over the last year to 51,701 apartments.
While the sales have increased as compared to last year during the demonetization period, the implementation of RERA and effective 10-15% price correction also helped the increase in sale. However, when compared to 2015, the sales were not as good as there was a 28% drop. A study by Knight Frank India reported that a total of 71,820 units were sold in 2015.
In markets of Mumbai, Bangalore, Chennai, National Capital Region, Hyderabad and Pune, the sales have declined by 2% from a year ago to 107,316. The data shows that the market hasn’t seen a complete revival and is still in buyers’ favour, although the effect of demonetization is dwindling. The CMD of Knight Frank India, Shishir Baijal said, “The near standstill triggered by demonetization seems to have tapered with time. At the same time, stakeholders are growing in confidence with the gradual acceptance of structural reforms such as the Real Estate (Regulation and Development) Act, 2016. Meanwhile, select markets wherein RERA has matured have witnessed developers re-launch projects at attractive prices which led to an uptick in sales volumes in 2017.” “The strategic switch in developers’ approach has led to a price reduction is most markets. All in all, it is a buyers’ market today. And, we hope the momentum to hold steady in the near future,” he added.
The new launches have also witnessed a drop of 21% and 70% compared to the December quarter of 2017 and 2015, respectively at 19,148 units. In the second half of 2017, the volume of new units that entered the market was 40,832 unit; approximately one-fourth of the supply levels in 2015. As compared to 2011, the sales volume was down by 62% in 2017. With a 7% decline as compared to 2019, it was at its seven-year low. Bangalore witnesses a 34% drop, while markets of Mumbai and NCR saw 21% and 19% rise respectively.
In the commercial real estate sector there was an increase of 7% in 2017, but was not on par with the occupiers’ demand. In the second half of 2017, the supple rose 13% from the previous year. Vacancy levels in office projects saw a 5-year low due to insufficient supply.