Housing sales recover in top cities – and it’s showing in real estate stocks

The real estate market in India’s top seven cities is recovering from the Covid-induced slowdown with housing sales climbing in the first half of 2021 thanks to a number of factors ranging from policy measures and low interest rates.

According to a report by US commercial real estate services and investment firm CBRE Group Inc., residential property sales in the top seven cities grew 75% during January-June 2021 from a year earlier, albeit on a lower base.

Continued push towards affordable housing, historic low lending rates, real-time measures by the government to absorb the shocks of Covid-19 followed by specific pandemic-related measures by various states led to green shoots across the country. 
The first half of 2021 was preceded by a strong show in the fourth quarter of 2020, when housing sales grew 73% on a quarter-on-quarter basis.

Pune accounted for the largest share of the total sales during both the instances. During January-June this year, Pune accounted for 26% of the share followed by Mumbai (19%), Hyderabad (18%) and Delhi-NCR (17%).
Maharashtra, Haryana, Delhi, Uttar Pradesh, Telangana, Tamil Nadu and Karnataka governments undertook various measures to support the real estate sector.

Source: CBRE Research report

Specific to Maharashtra, the state government cut stamp duty from 5% to 2% effective September 2020 to December 2020, and 3% effective January 2021 to March 2021. The state budget allowed for additional benefits for women buyers. In addition, the state government also allowed developers to utilize 100% floor space index (FSI) of the plot area if they agreed to transfer a portion of their land to the Mumbai municipality for public works.
Key stocks

Mahindra Lifespace Developers – the residential property developer under the Mahindra & Mahindra Group – has seen its stock rise two-and-a-half times in the past year. Shares of Gurugram-based DLF, India’s most valued developer, have also jumped two-and-a-half times since August last year.
Godrej Properties – with 15 ongoing projects in Mumbai and 13 in Pune – appears to have been a big beneficiary of the state-wide measures. The green shoots are visible in its stock price, with its shares rising 75% in the past year.

Lodha Group’s Macrotech Developers, India’s second-largest listed company, has seen its stock nearly double since it listed in April 2021. The builder is developing a host of residential projects in Mumbai and its outskirts. These include the world's tallest residential tower, The World One tower.