Sales figures for February and March are yet to come in, but analysts said the numbers are almost minimal, as buyers did not show much interest in this segment.

Your next penthouse or condo in a prime market like Mumbai or Gurgaon could cost much less, as the Covid-19 outbreak has dealt a harsh blow to the luxury housing segment, which has already been in the dumps with more than half of the units launched in the past three years remaining unsold.

As per data from PropTiger.com, around 7,364 units across various price points (between Rs 3 crore and above Rs 7 crore) launched between December 2016 and December 2019 have remained unsold as of January 2020.
India’s financial capital, Mumbai, has the highest lot of unsold luxury apartments at 30,015 units, followed by India’s pharmaceutical capital Hyderabad (8,554 units) and the Silicon Valley of India, Bengaluru, with 5,794 unsold units. This includes apartments priced in the range of Rs 1 crore and above Rs 7 crore.

Sales figures for February and March are yet to come in, but analysts said the numbers are almost minimal, as buyers did not show much interest in this segment.

Mani Rangarajan, group COO of Housing.com, Makaan.com and PropTiger.com, said this was to be expected as the pandemic has adversely impacted all businesses across the world. The short-term negative impact on housing was evident in housing sales for the March 2020 quarter. “We expect negative impact to continue for luxury properties for the first half of the current financial year. However, we hope that the various support measures announced by the government and the RBI would start yielding positive results over the rest of the financial year,” he told FE.
Social distancing during and post-lockdown is likely to bring about a major change in consumer behaviour. While physical property site visits came to a standstill last month, online searches as well as online home bookings have increased significantly, he added.

A recent report by global real estate consultancy Knight Frank also projects a decline in prime residential property prices in Mumbai. “The prime residential market of Mumbai is expected to see a price fall of 5% in the year 2020. For 2021, Mumbai’s prime residential market is expected to witness a price decline of 3%,” Knight Frank’s prime global residential forecast said. Mumbai ranks 33rd with 0.1% annual change for the period Q1 2019–Q1 2020. The city registered a price decline of -0.1% in Q1 2020 compared to the previous quarter, it added.

Knight Frank India chairman & MD Shishir Baijal said, “India’s key markets will also be facing uncertainty, mostly due to a significant erosion of confidence amongst buyers across spectrum.

However, this also presents with a ray of hope for serious buyers with adequate liquidity to enter the real estate segment in India world, as values would be attractive.”

Knight Frank’s forecast for 20 cities globally projects only Lisbon, Monaco, Vienna and Shanghai markets to see price growth throughout the remainder of 2020.

It explained that unsold inventory pressure, coupled with tough economic environment, reflected in a six-year-low GDP growth rate in Q3 FY20, and had strained prime residential market across key cities. The Covid-19 pandemic, which started to reflect on market activities from mid-March this year, has further aggravated the concerns of this segment.

A majority of analysts expect that sales in prime residential space are likely to start recovery from July-September and October-December 2020 onwards and full recovery could take more than 12 months.