A Million Ready-To-Move-In Homes to Hit India’s Prime Markets By 2020: PropTiger Report
A dramatic drop in new launches, with builders making project completion their key priority in a harsh market that poses challenges to their survival, is expected to help delivery rates touch a record high.
Nearly a million housing units will be delivered between 2019-2020 shows PropTiger.com data. Of these, a total of 205,279 units have already been delivered in the first half of 2019 while the remaining 8.5 lakh homes would be available in these one-and-a-half years. More importantly, only 2.32 lakh units that are set for delivery between the second half of 2019 and entire 2020 are unsold units.
Targeted efforts by the developers have led to unsold housing stocks reducing remarkably in the April-June quarter of FY20. India’s nine major property markets had nearly 7.98 lakh of unsold housing units, the lowest level seen in the past three years. However, developers’ woes pertaining to unsold stock are still far from over.At the current sales velocity, builders would still take 30 months to sell off the existing stock.
“In the past, project delays resulted in developers attracting negative publicity, denting fortunes in most cases and leaving several struggling for survival. A correction in this aspect was absolutely necessary, and we see faster project delivery as a much-desired welcome change that would definitely be instrumental in turning the luck for India’s realty sector,” says Dhruv Agarwala, Group CEO, Elara Technologies.
How affordable are these ready-to-move homes?
Affordability isn’t an issue since over 1.2 lakh of the over 2.32 lakh homes unsold units, are homes priced below Rs 45 lakh. It begs mention here that the government in the past one year has launched many measures to boost demand in the affordable housing segment to fulfill its ambitious target of ‘Housing for All by 2022.’ The latest measure is the grant of the Rs 20,000-crore stress fund that would particularly benefit developers of affordable housing projects that are stuck owing to last-mile liquidity issues.
In this year’s budget, the government also increased the tax deduction limit on the home loan interest component to Rs 3.50 lakh for units priced within Rs 45-lakh budget. The rate of goods and services tax (GST) has also been brought down to one per cent for affordable housing projects. Additionally, home loans are available to borrowers at record low interest rates currently as the Reserve Bank of India (RBI) has brought down its own lending rate to a nine-year low of 5.40 per cent. Further, barring Hyderabad, property rates in most prime markets have undergone a correction in the past half decade.
Lucrative markets for investment
If the choice is purely monetary, Ahmedabad and Noida property markets are highly convenient as the average rate per square foot (psf) in these cities are as low as Rs 1,200, the lowest seen in any major city. Incidentally, a large part of the upcoming stock would be concentrated in Noida.
While Mumbai remains the most expensive property market in the country, buyers would find affordable property towards the periphery, where property prices start from Rs 2,100 psf. The arrival of 254,559 fresh units in the city only makes it more convenient for buyers to have their pick from a large stock.
Investors looking for options to earn handsome rentals and impressive appreciation can explore the Hyderabad property market, a city that offers a much saner price range than most cities. While the starting price here is Rs 2,300 psf, rates would go only as high as Rs 13,900 psf. On the contrary, one can see the upper limit hitting Rs 94,000 psf in Mumbai.