Residential realty records 60% sales growth in Q2 FY21: ICRA

                The residential real estate segment has witnessed a sharp recovery in Q2 FY2021, post a severe decline in Q1 FY2021, according to ICRA, a rating agency. Mumbai 
Metropolitan 
Region (MMR), Pune, and National Capital Region (NCR) remained the highest contributors to pan-India sales in the said quarter, the agency said.

Overall the housing sales volume witnessed a Y-o-Y decline of 50% in H1 FY2021 across the top eight cities of the country. However, sales volume bounced back 
considerably with a 
Q-o-Q growth of 60%, recorded across property markets in the second quarter of the current fiscal.

While quarterly average sales for under-construction units registered a decline of 78% during H1 FY2021, a significantly lower decline of 29% was noted for advanced 
stage/completed projects.

ICRA continues to expect the overall financial and operational performance of real estate developers to be adversely impacted in the short term due to the escalated 
demand risks, 
lower collections, and Covid-related disruptions in project execution

The ratings agency had earlier expected a 45% overall decline in sales volumes in FY21. However, post the lows in Q1 FY21, sales across the top eight cities of India 
rebounded in 
Q2 FY21, indicating some green shoots of normalisation. With some further recovery expected in H2, it is revising its earlier estimate of sales volume decline in FY21 to 
35-40%.

Shubham Jain, senior vice president and group head at ICRA said, "Increasing digitisation has played a key role in enabling sales in the current environment, with 
extensive use of 
digital marketing and digital engagement tools by the developers aiding online home sales and transaction payments. The crisis has thus pushed the sector towards 
widespread 
technology integration."

Buyer preferences for rightly priced inventory at advanced stages of construction continued to be in place, although larger format units seemed to be finding increasing 
favour, possibly 
due to the requirement for dedicated work and study areas.

The uptick in absorption levels during Q2 FY2021 has also been driven by the affordable and mid/upper-mid segments, indicating the higher resilience of these segments 
to the 
demand headwinds currently prevailing in the residential realty market.

“Going forward though, sustainability of the uptrend and its drivers remains to be seen. Moreover, with the Q2 FY2021 sales still remaining 37% lower than the levels 
recorded in Q2 
FY2020, a return to pre-Covid sales levels also remains a key look-out area. Consequently, the trend of market consolidation is likely to accelerate, with range-bound 
prices and low 
home loan rates expected to continue supporting sales for established players”, added Jain.

Source: ET Realty