Indian real estate sector witnessed strong growth in affordable housing segment in 2019 with 40% of the new housing launched in this segment, followed by 33% new supply in middle housing segment.

For the housing sector, 2019 was a non-event in terms of sales growth and investor interest. Sentiments remained subdued, sustaining almost solely on end-user activity focused on ready-to-move-in or almost-complete homes.

Branded developers gained ground, with some listed players performing exceptionally well on sales and commensurate revenue growth. As per ANAROCK research, the housing sales value of India’s top 9 listed players touched INR 108 billion in the 2nd and 3rd quarters of 2019, amounting to a 5% q-o-q growth. However, some other big names were dragged into insolvency.

Smaller developers continued to perish or collaborate with the big players due to extreme financial constraints. To be certain, the liquidity crisis gave no respite to the housing sector. Private equity inflows in residential real estate remained subdued, with major PE funds focusing on the commercial segment.

For the housing sector, the only light at the end of the dark financial black hole was the announcement of the alternative investment fund (AIF) of INR 25,000 Crore to facilitate the completion of stuck affordable and mid-segment homes.

In fact, affordable housing remained upbeat in 2019 thanks to multiple government sops throughout the year. First-time homebuyers were given further tax deductions (now amounting to INR 3.5 lakh in a year) on interest amount of home loans below INR 45 lakhs availed within FY 2020 end. Luxury and ultra-luxury segments remained limited to end-user interest, with no serious investor activity.

Of the estimated 2.3 lakh new unit launches in 2019 in the top 7 cities, nearly 40% or approx. 92,000 units were in the affordable segment, followed by mid-segment with a 33% share. The luxury and ultra-luxury segments accounted for the least share with 10% (approx. 23,000 new units).

Housing sales in 2019 saw a modest 4-5% annual growth with over 2.58 lakh homes sold during the year. (Over 2.48 lakh housing units were sold in 2018.)
New housing launches in 2019 saw 18-20% annual growth with new launches in the region of over 2.3 lakh units. (1.95 lakh units were launched in 2018.)