Realty sector in India witnesses growth on robust housing sales

V Nagarajan

India’s top seven cities recorded new unit launches of around 93,500 units in the Q3 of 2022 as against 82,100 units in the Q2 of 2022, up by14 per cent over the previous quarter.

Key cities contributing to Q3, 2022 new unit launches included MMR, Hyderabad, Pune, and Bengaluru, altogether accounting for 86 per cent of the total addition.

MMR has witnessed the highest volume of new launches in the current quarter, accounting for 39 per cent of the total new supply across the top seven cities.

Chennai comprised the lowest share (of 3 per cent) of new launches amongst the top 7 cities in India, according to Anarock survey.

Mid-segment homes continue to dominate new supply with 36 per cent share, followed by the premium and affordable segments with 28 per cent and 18 per cent share respectively.

Around 88,200 units were sold in Q3, a marginal increase of 4 per cent over Q2. On yearly basis, the housing sales in Q3 jumped up by 41 per cent across the top seven cities.

NCR, MMR, Bengaluru, Pune, and Hyderabad together accounted for 90 per cent of the sales in the quarter. Chennai witnessed the lowest housing sales amongst the top cities, contributing 4 per cent share.

Available inventory increased by 1 per cent in Q3 of 2022 over Q2 of 2022 due to strong new housing supply in the current quarter.

However, on an annual basis, available inventory declined by 4 per cent in Q3 2022 across the top seven cities.

Amongst the top cities, Chennai witnessed highest yearly drop in the available housing inventory by 23 per cent, followed by Delhi-NCR which recorded 20 per cent yearly decline.

Hyderabad is the only city to have the highest volume of new launches in the premium segment amongst all top seven cities, comprising total share of 54 per cent within the city’s overall new supply.

Kolkata, stood as the frontrunner in the affordable housing segment, accounting for 51 per cent of new supply in the city in this price bracket.

The Indian residential sector is expected to remain buoyant in the festive fourth quarter. Despite the recent fourth consecutive repo rate hike by the RBI which led to increased home loan rates, housing sales are likely to remain more or less the same as last year.

As per Anarock research, 91,000 units were sold during the festive quarter Q4 of 2021. This year, even while home loan rates and developer prices have increased in the wake of 190 bps repo rate hike by the RBI and input costs, respectively, the sales momentum will continue.

Grade A developers are reporting high sales despite a price rise, and this will prevent them from any significant reductions in average property prices in the upcoming festive quarter.

At the most, only smaller developers may reduce the prices to attract buyers in the upcoming festive season.

Going forward, residential demand is expected to remain steady and be driven primarily by the end-users, which will inevitably prevent any unnatural speculative spikes. Grade A developers will continue to dominate the residential market and gain more market share.

Input cost pressures could lead to further upward revision of prices between 1-2 per cent in Q4 of 2022. Average property prices rose 1-2 per cent in Q3 of 2022 amidst escalation in input costs and overall increased sales.

I have entered into a JV with a developer and the construction is partially completed but completion certificate has been issued for part of the project. In such a scenario, how the capital gain charged for tax purposes? Mukul Goel, Sharjah

Generally, capital gain shall be chargeable to tax in the year in which certificate of completion for the whole or part of the project is issued by the competent authority.

In your case, capital gain proportionate to the land involved in the part of the project for which certificate of completion has been issued shall be chargeable to tax in the year in which such certificate has been issued by the competent authority.

I have invested in commercial property in Pune and wish to mortgage the unit to raise funds. Does it require any approval? Are there restrictions while mortgaging it to the banks or other lending institutions? Please clarify. Wadhwani, Dubai.

You can mortgage the commercial property to an authorised dealer/housing finance institution in India without the need to get any approval from the authorities.

You can also mortgage to a party abroad but with prior approval of Reserve Bank of India.