More people invest in residential properties; 85% of houses under construction for 2021 booked | Financial Express
The current situation involving work from home culture has created demand for large sized apartments. This, in addition to cheaper housing, and perception of bottoming real estate prices are now driving the demand for residential real estate.
With home loan interest rates now being low, more people are now able to afford residential properties. The current situation involving work from home culture has created demand for large sized apartments. This, in addition to cheaper housing, and perception of bottoming real estate prices are now driving the demand for residential real estate, a report by JM Financial Institutional Securities noted. According to the report, more people are buying houses across the country resulting in clearance of ready-to-move-in (RTMI) inventory and increase in purchase of under construction houses for this year.
Clearing house inventories
The residential markets are now witnessing a rise in clearance of inventory across ready to move in properties. The data shown in the report suggest that in the year 2019, the RTMI inventories in the top seven Indian cities including Bangalore, Mumbai and Pune accounted for Rs 80,000 crore (approximately); this, in the year 2021, fell to around Rs 60,000 crore, and is expected to fall further.
For houses under construction, of the total units that are expected to be delivered by the end of 2021, 85 per cent has already been pre-sold. For the years 2022, 2023 and 2024, 68 per cent, 55 per cent and 47 per cent of the properties, respectively, have been pre-sold, “indicating limited chances of industry facing a supply overhang like in the past.”
Cities like Pune, Delhi, Mumbai, Thane, Bangalore, Navi Mumbai, Chennai, Hyderabad, Kolkata, Greater Noida, Ghaziabad, Faridabad and Gurugram, produced more than 2.95 million units in total between 2007 and 2020. Of the total units, 98 per cent of units have been sold.
Going forward, “Large branded developers are likely to complete all of their projects due to lower possibility of legal issues and availability of capital. While some of these projects may take more time or are not profitable, inventory overhang is not expected to increase as developers are unlikely to delay projects,” read the report.
Converting commercial land into residential
The report highlighted that the outlook for commercial and retail spaces remains uncertain in the near term. This has led some developers to convert these land parcels into residential land as they are more confident on the demand coming from residential space. Recently, Oberoi Realty had dropped plans for a mall /commercial building in Mumbai (Worli) and is now favouring a residential project which is expected to be more profitable.
For more info click the below link : financialexpress.com/…/oberoi-realty-ltd-stock-price