India Real Estate
Residential market holds ground despite headwinds
2019 has been a turbulent year for the Indian economy with the retail inflation soaring as high as 5.5% in November with the GDP slumping to a six year low for the July-September quarter. The residential real estate sector, however, remained resilient as the sales surged by 6% y-o-y despite muted consumption expenditure. Remarkably the sales exceeded the launches for the first time post 2016 and reached 143,923 units which demonstrates the innate growth potential of the sector.
Residential sector shows resilience
Source: Real Estate Intelligence Service (JLL), 2019
On the supply front, launches decreased by 14% in the current year due to the liquidity crisis underlying the sector that resulted in developers adopting a cautious stance to launching new projects. The larger markets of Bengaluru and Mumbai continued to account for a majority of launches. The developers focussed on launches in the affordable and mid-segment category. With smaller players not finding it viable to operate in the current scenario, the market share of reputed developers has been increasing. Project launches are expected to gain steam once the various key government measures rolled out in the current year start bearing fruits.
Going ahead, new unit launches are expected to remain modest as developers, grappling with the liquidity crisis, continue to realign themselves with policy reforms and focus on clearing their unsold inventory. Consolidation in the residential market with an increasing number of joint developments will continue to be a major trend in the near term with the size of pie belonging to reputed developers increasing consistently.