SWAMIH Investment Fund I to invest in

                    SWAMIH Investment Fund I to invest in
        Imperia Group’s residential projec ‘The Esfera’ in Gurgaon

The transaction exclusively advised by JLL, will benefit about 450 homebuyers

The Government of India sponsored Special Window for Affordable and Mid-Income Housing SWAMIH Investment Fund I (“SWAMIH”), has committed to invest in completing the phase II of Imperia Group’s residential project ‘The Esfera’ in Gurgaon. As an outcome of this investment, Imperia Group, the developer will be able to revive and complete this project resulting to benefiting close to 450 homebuyers.

The Fund is managed by SBICAP Ventures, a 100% subsidiary of SBI Capital Markets, which in turn is a wholly owned subsidiary of the State Bank of India. JLL is the exclusive transaction advisor for the deal. The Esfera, Gurgaon was launched in 2012 as a 1.2 million sq. ft. mid-segment residential project spread over 11 acres in Sector 37C, Gurgaon.

As a lifeline to the residential real estate segment, the Government of India launched SWAMIH, providing relief to developers struggling to complete their unfinished projects. In November 2019, the Government of India had announced INR 25,000 crore - Special Window to help complete over 1,500 stressed housing projects comprising of around 4.58 lakh housing units. Due to the impact of the pandemic on the economy, fault lines in the real estate sector had started appearing since last year. Many developers saw their cash flows drying up overnight due to various factors including market condition, economic scenario amongst others, leading to unfinished projects and impacting many home buyers.

“The residential market in India has emerged much more resilient post the second wave of the pandemic. In Gurgaon micro market, new launches have already started. In the last two years, the supply was restricted in this market due to the circle rates and lack of stamp duty benefits. But the situation is turning positive with an array of tier I launches in the city. In fact, this micro market has been leading in sales of upper middle and high-end segments within the entire NCR region in the past few quarters. Prices have remained benevolent, but we see fair opportunity of appreciation in the coming few months to years,” said Manish Aggarwal, Managing Director, North and East, India, JLL.

Home sales in H1 2021 increased by 18% as against H1 2020. The sustained levels of residential sales present clear signs of demand and buyer confidence coming back to the market. The need for secured tangible assets and aspirations to own larger homes as remote working becomes the new norm is driving sales of residential properties across the country.

“The fund objective is to provide capital to stressed projects to help the home buyers realize their dream of living in their own homes. With this capital being provided, we are confident that close to 450 home buyers will soon be able to move into their dream homes,” said Irfan A. Kazi, Chief Investment Officer, SWAMIH Investment Fund I.

"We are extremely pleased to have been reposed with the trust and confidence of the SWAMIH Investment Fund. With the new influx of funds, we aim to reach the delivery deadline for The Esfera at the earliest and plan to achieve greater benchmarks in quality, safety and customer experience." said Harpreet Singh Batra, Managing Director, Imperia Structures Ltd.

RBI maintains ‘status quo’ to cushion the economy in

         Dr. Samantak Das, Chief Economist and Head of Research & REIS, JLL India.

RBI maintains ‘status quo’ to cushion the economy in the light of the pandemic resurgence; low mortgage rates to provide room for continued residential real estate growth

 

“The resurgence of the pandemic and resultant concerns of its impact on economy and businesses demanded a resilient approach. The Central bank has responded by taking an accommodative stance, kept the repo rates unchanged. The health of the economy has now become more contingent on the progress of vaccination and control of pandemic. In such a scenario, holding the repo rates at 4% is likely to cushion the impact on economy due to intermittent and regional lockdowns. The government’s decision to retain the inflation target of 4% with a tolerance band of +/- 2 percentage points for the coming five years provides continuity to the stance of the monetary policy committee.

Demand for residential real estate has revived as homebuyers took advantage of the lowest mortgage rates along with realistic pricing and various freebies and options rendered by developers. Residential sales in Q1 (Jan-March) 2021 recovered to more than 90% of the volumes witnessed during pre-Covid times across the top 7 cities. The sustained growth in sales presents clear signs of demand and buyer confidence coming back to the market. The recent surge in the spread of the pandemic is likely to impact the home buying sentiment for a few months. However, we believe that overall residential sales are likely to surpass the pre-Covid levels in the coming quarters.”

Residential sales recover over 90% to pre-Covid levels in

Key Highlights:

• Residential sales at 25,583 units in the first quarter of 2021 over 27,451 in Q1, 2020
• Q1, 2021 witnessed new launches of 33,953 residential units, a jump of 27% over Q4, 2020
• Focus on mid and affordable segment continues in Q1 2021 with nearly 70% of the new launches in the sub INR 10 million category
• Unsold inventory increased marginally to 470,750 units
• Development focus on mid and affordable segments continues in Q1 2021 with 69% of the new launches in the sub INR 10 million categories
• In Q1 2021, Mumbai accounted for 23% of the sales, followed by Delhi NCR with a share of 21%
• Kolkata saw the maximum increase in sales activity in Q1 2021 in comparison to the fourth quarter of 2020. In Kolkata, the offtake of residential units in Q1 2021 was driven by South Suburbs (Joka, Kasba, Behala, Jadavpur, Tollygunje) and East Suburbs (EM Bypass, Rajarhat, Topsia) with a combined contribution of more than 70%
• Chennai – sales was driven by Southern Suburbs (Perungudi, Pallavaram, Medavakkam, Navalur, Thalambur, Nanganallur) which accounted for nearly 60% of the total offtake during the quarter.
• Hyderabad – the Western Suburbs (Gachibowli, Manikonda, Kukatpally) submarket accounted for more than 65% of the sales during the quarter 
• Pune – North East (Viman Nagar, Kharadi, Wagholi) and North West (Hinjewadi, Wakad, Baner) accounted for 67% of the sales during the quarter
• Most of the new launches in the markets of Bengaluru, Hyderabad, and Pune were in the sub INR 10 million category Bengaluru – 77%, Hyderabad – 76%, Pune – 100%
  
  

Residential sales recover over 90% to pre-Covid levels in Q1, 2021: JLL

  

• Residential sales at 25,583 units in the first quarter of 2021 over 27,451 in Q1, 2020
• Q1, 2021 witnessed new launches of 33,953 residential units, a jump of 27% over Q4, 2020
• Focus on mid and affordable segment continues in Q1 2021 with nearly 70% of the new launches in the sub INR 10 million category
• Unsold inventory increased marginally to 470,750 units

 

Residential sales in Q1 (Jan-March) 2021 recovered to more than 90% of the volumes witnessed in Q1 2020 (pre-Covid) across the top seven cities, according to JLL Q1 Residential Market Update - Q1 2021 released today. The cities including Chennai, Hyderabad, Kolkata, and Pune surpassed the sales volumes of Q1 2020. Overall sales increased by 17% on a sequential basis. Importantly, sales either improved or stayed at similar levels (in Q1 2021 when compared to Q4 2020) in majority of the residential markets under consideration. Mumbai has consistently been the largest contributor to sales in the last four quarters. In Q1 2021, Mumbai accounted for 23% of the sales, followed by Delhi NCR with a share of 21%.

However, Kolkata saw the maximum increase in sales activity in Q1 2021 in comparison to the fourth quarter of 2020. In Kolkata, the offtake of residential units in Q1 2021 was driven by South Suburbs (Joka, Kasba, Behala, Jadavpur, Tollygunje) and East Suburbs (EM Bypass, Rajarhat, Topsia) with a combined contribution of more than 70%.

Residential market reached more than 90% of pre-Covid sales

	Q1 2020 (in units)	Q1 2021 (in units)	Recovery Sales in Q1 2021 as a proportion of sales in Q1 2020
Bengaluru	4,186	2,382	57%
Chennai	2,453	3,200	130%
Delhi NCR	5,941	5,448	92%
Hyderabad	3,027	3,709	123%
Kolkata	1,259	1,320	105%
Mumbai	6,857	5,779	84%
Pune	3,728	3,745	100%
Total	27,451	25,583	93%

 

Mumbai includes Mumbai city, Mumbai suburbs, Thane city and Navi Mumbai

Source: Real Estate Intelligence Service (REIS), JLL Research

 

Chennai – sales was driven by Southern Suburbs (Perungudi, Pallavaram, Medavakkam, Navalur, Thalambur, Nanganallur) which accounted for nearly 60% of the total offtake during the quarter.

Hyderabad - the Western Suburbs (Gachibowli, Manikonda, Kukatpally) submarket accounted for more than 65% of the sales during the quarter. 

Pune – North East (Viman Nagar, Kharadi, Wagholi) and North West (Hinjewadi, Wakad, Baner) accounted for 67% of the sales during the quarter.

 

Sales volume increased across most markets

	Q2 2020 (in units)	Q3 2020 (in units)	Q4 2020 (in units)	Q1 2021 (in units)	Growth (%) Q1 2021 over Q4 2020
Bengaluru	1,977	1,742	2,535	2,382	-6%
Chennai	460	1,570	2,500	3,200	28%
Delhi NCR	2,250	3,112	4,440	5,448	23%
Hyderabad	1,207	2,122	3,570	3,709	4%
Kolkata	481	390	438	1,320	201%
Mumbai	3,527	4,135	5,026	5,779	15%
Pune	851	1,344	3,323	3,745	13%
Total	10,753	14,415	21,832	25,583	17%

Mumbai includes Mumbai city, Mumbai suburbs, Thane city and Navi Mumbai

Source: Real Estate Intelligence Service (REIS), JLL Research

 

“The sustained growth in sales presents clear signs of demand and buyer confidence coming back to the market. This has been on the back of historically low home loan interest rates, stagnant residential prices, lucrative payment plans and  freebies from developers and government incentives such as the reduction of stamp duty in states like Maharashtra and Karnataka (for affordable housing). The ease of lockdown restrictions and the commencement of the vaccination drive have further aided in bringing buyers back to the market,” said Dr. Samantak Das, Chief Economist and Head Research & REIS, JLL.

 

“In the fourth quarter of calendar year 2020, India’s economy returned to growth territory, recording a 0.4% rise in GDP. In tandem with the GDP growth, the pace of recovery in the residential market intensified with sales increasing by 51% when compared to the previous quarter. In Q1 2021, sales of residential units continued an upward trajectory. Sales, at the overall level, increased by 17% on a sequential basis,” he added

 

The Covid-19 pandemic tilted the scale further in favor of established developers. As the sector shows signs of recovery, prominent developers are expected to be at an advantage and capture a greater share of the market. Homebuyers have become even more cautious in their home purchase decisions. There is an increased preference for investing in projects by developers with an established track record. Only credible developers, who have execution capability as well as quality products, and conduct their business in a transparent manner will be able to operate in the post-covid era in a sustainable manner. Ultimately, this will lead to greater transparency and improved consumer sentiment in the market.

“The Government is committed to boost affordable housing. The recent Union Budget has extended the benefit of additional interest deduction on home loans for first-time homebuyers in the affordable segment. Further, there is a time extension to claim the tax holiday on profits from affordable housing projects until March 2022. The housing loan going below 7% for the first time in the last decade also triggered sales in all segments in the residential real estate. The buoyancy in the market manifested in the form of low mortgage rates and stable prices are expected to continue and attract fence-sitters and serious end users,” said Siva Krishnan, Managing Director, Residential Services (India), JLL

 

RBI is leading the way to recovery by holding policy rates at historically low levels to initiate a cycle of consumption led growth. As concerns related to jobs and a stable flow of income are alleviated, buyers are coming back to the market to make the most of this ‘great time to purchase a house’.

 

New Launches scale up, focus on affordable homes continues

	Q2 2020 (in units)	Q3 2020 (in units)	Q4 2020 (in units)	Q1 2021 (in units)	Growth (%) Q1 2021 over Q4 2020
Bengaluru	6,135	1,074	4,335	5,469	26%
Chennai	182	1,487	2,892	5,036	74%
Delhi NCR	Negligible	699	2,244	4,734	111%
Hyderabad	5,034	5,396	10,313	8,591	-17%
Kolkata	Negligible	Negligible	638	583	-9%
Mumbai	2,294	2,242	3,223	4,616	43%
Pune	1,135	1,756	3,140	4,924	57%
Total	14,780	12,654	26,785	33,953	27%

Mumbai includes Mumbai city, Mumbai suburbs, Thane city and Navi Mumbai

Source: Real Estate Intelligence Service (REIS), JLL Research

 

The first quarter of 2021 witnessed new launches of 33,953 residential units, a jump of 27% over the last quarter of 2020. Hyderabad continued to dominate new launches and accounted for more than a fourth of the overall launches during the quarter. Bengaluru, which formed more than 16% of the new launches followed. The markets of Delhi NCR and Chennai witnessed a substantial increase in launch activity during the quarter. New launches are still at 84% when compared to the pre-Covid levels of Q1 2020. Developers across the markets under review remain focused on the completion of under construction projects and clearing their existing inventory.

 

Development focus on mid and affordable segments continues in Q1 2021 with 69% of the new launches in the sub INR 10 million categories. In the coming quarters, the focus on these price segments is expected to continue with developers trying to reap the benefits of strong pent up demand in these segments. Most of the new launches in the markets of Bengaluru, Hyderabad, and Pune were in the sub INR 10 million category Bengaluru – 77%, Hyderabad – 76%, Pune – 100%.

 

Unsold inventory increases marginally

	Q4 2020 (in units)	Q1 2021 (in units)	Growth (%) – Q4 2020 over Q3 2020
Aggregate (7 cities)	462,380	470,750	2%

Top 7 cities include Delhi NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Pune and Kolkata

Mumbai includes Mumbai city, Mumbai suburbs, Thane city and Navi Mumbai

Source: Real Estate Intelligence Service (REIS), JLL Research

 

As new launches outpaced sales, unsold inventory at various stages of construction across the seven markets under review increased marginally from 462,380 units to 470,750 units. Mumbai, Delhi NCR, and Bengaluru together account for 70% of the unsold stock. An assessment of years to sell (YTS) reveals that the expected time to liquidate this stock has increased from 4.2 years in Q4 2020 to 4.6 years in Q1 2021.

 

It’s a “buyer’s’ market with price continuing a downward trend

 

Residential prices in the majority of India’s residential markets have remained stagnant in the past few years. In Q1 2021, prices remained largely stagnant when compared to the previous quarter, across all the seven markets under review. This being said, it is important to point out that few developers in certain markets are providing moderate price discounts to boost sales. Moreover, developers are offering attractive freebies including payment schemes such as no EMIs for a year, no stamp duty and so on to attract homebuyers who pressed ‘pause’ in the last few months. This has led to a reduction in ‘effective prices. This rationalisation combined with reduced home loan rates has further improved affordability in the residential market.

 

As developers continue to focus on recovering the volumes lost amidst the pandemic and gaining a foothold in their respective markets, prices are expected to be largely range-bound across most of the markets in the short-term.

 

Sustained growth of the sector expected in 2021

 

Guided by the expected economic growth trajectory, the uncertainty around the stability of jobs and incomes is only expected to reduce in the coming quarters. This is likely to have a direct positive impact on the housing sector with enhanced buyer confidence.