In the backdrop of a drastic slowdown over the past two to three years, the beleagured realty sector – especially the residential real estate subsegment where unsold inventories have plagued the players – is seeing a perk-up and some revival, and home sales are picking up with the onset of the just-begun festive season. While this trend heralds good tidings for realty, a complete turnaround in the residential real estate market might just take some more time. NRI Achievers presents here an overview on the trends in the real estate sector …
The NCR market, which has been worst hit due to the slowdown, is now showing signs of revival with the begin of the festive season. Noida-based builders are enthused today by the response shown by home buyers’ during the Navratras. Four prominent builders of Noida – Gaursons, Ajnara, Antriksh and Saya have reportedly sold some 347 units in all (131, 105, 105 and 65 units respectively) during the 9-day auspicious period. In addition, leading real estate marketing company ‘Investor Clinic,’ which had organised a two-day ‘Navratra Propfest’ on the 8th and 9th of October has managed to sell 200 units, according to its CEO Honey Katyal.
Akshay Taneja, MD of TDI Infratech Private Limited, believes that customers are more encouraged to invest in properties this year in comparison to last year, as home loan rates are lower and property prices are stable. “That home buyers who were holding back their buying decisions have now become active is clearly evident from the sale velocity. We have already got a number of bookings for our Sonepat and Mohali projects. And as the festive season has marked a good start, we expect to witness more sales velocity in days to come.”
Prashant Tiwari, Chairman of the Prateek Group, is in concurrence with Taneja. “This year we have witnessed a cheering response from customers as compared to the last 2-3 years. Amidst corrected property prices and good deals on offer, this festive season has increased demand from potential home buyers with a sizable number of bookings. Considering that this is just the beginning of the festive season, we expect sales activity to be even more encouraging in coming days. We are hoping for a turnaround very soon,” he says.
Sunil Mishra, CBO of Prop Tiger, is positive about the festive season turnaround: “This is the first festive season when after almost 2-3 years of quarter-on-quarter decline, sales have picked up for the first time, with affordable homes contributing to 50 percent of the overall sales and primary sales picking up amidst increase in the number of launches in Mumbai, Pune and Hyderabad. With the fastest growing GDP, key realty reforms like RERA, price correction in real terms over past 2 years and stimuli from developers in the form of sharp deals, this festive season could see a much sharper spike in purchases by customers than what has been seen during the past 3 years, he avers.
The significant trend of online carnivals with participating corporate brands like Tata housing, Godrej Properties and Mahindra Lifespaces besides other prominent developers, have provided a much needed impetus to home sales. JLL-HouseBolo.com, India’s first web-based carnival, is showcasing pan-India residential properties on auction – from renowned builders from Delhi-NCR, Mumbai, Bengaluru, Chennai, Kolkata, Pune, Hyderabad etc. According to Ashwinder Raj Singh, CEO of Residential Services, JLL India – their online campaign with HouseBolo.com is getting a good response, in view of the exclusive discounted prices, special payment plans and zero brokerage to end buyers on purchase of new properties – and above all transparent and efficient pricing. “While basic market price is confusing for home buyers with different sources sharing different rates, our auction platform tends to bring in more clarity and establishes a fair price for the property. Moreover it gives the buyer the convenience of price discovery with minimum bias without the intervention of any third party.”
Magicbricks.com has come up with its ‘Dream Homes Festival’ showcasing some 400 projects from 100 developers in cities like Delhi NCR, Mumbai, Bengaluru, Chennai, Pune, Hyderabad, Ahmedabad, Jaipur, Lucknow, Vadodara, Indore, Chandigarh, Dehradun, Nagpur, Ranchi, Patna etc., with customised deals and discounts up to INR 30 Lakhs. According to Sudhir Pai, Magicbricks.com CEO, with an aggregated 200 plus deals across 8 top cities, overall traffic on the website has shot up by 60 percent, with big traction from the affordable housing segment due to plenty of unsold inventory and price sensitivity of buyers. Another noticeable trend is that the secondary market is getting two times more number of leads thanks to better pricing. In projects where fresh sales is happening close to the resale price, demand for fresh properties is 50 percent more. “Though we do not track transactions, it is a fact that the number of enquiries has gone up substantially. Over 40,000 enquiries have been generated during the first eight days of the event itself, with encouraging feedback from developers. We hope to cross 100,000 enquiries by the time the event ends, opines Pai.
Ahead of this festive season, real estate reforms had created the grounds for positive sentiment. But the question is: Has RERA really contributed to the spike in home sales this festive season by boosting home buyer confidence and reviving trust in developers? Tapan Singal, a real estate and regulatory expert and the Group Director of Lotus Green, rules out any direct role of RERA in the spurt in sales that may happen during festive season: “RERA does not have any direct relationship on marketing of a real estate project, whether under-construction or greenfield. A case of developers adding credibility to tghemselves on account of being RERA-compliant, and leveraging the same for the purpose of marketing is yet to be seen.”
Home buyers have been avoiding investing into under-construction projects and were instead opting for ready-to-move-into homes to ensure safety of their capital for the past several months in the run up to this festive season. And this same trend is overtly visible in this festive season as well. Raheja Developers had come up with their ‘Big Bang’ sale during the Navratras, offering exclusive discounts of upto 30 percent on their ready-to- move-into and nearing-completion properties. “The end-results of our sale has been phenomenal – we got about 7000 unique leads, most of them with significant closures. And all of them for our premium properties located at prime locations – like Dwarka Expressway and Sohna Road. We are expecting more closures as the festival season has just begun and sales are better than last year,” says Navin Raheja, Chairman of Raheja Developers.
Keeping in view the reluctance of home buyers to go in for under-construction properties, real estate developers are out to win back the confidence of home buyers. To assure buyers of their transparency and fair dealing, some of them like the Rahejas have been specifically mentioning that there are no hidden charges like PLC (Preferred Location), Club Membership, Super Area Increase and Escalation in their offers itself, thus assuring buyers that only government charges like Service Tax, VAT, EDC/IDC, Stamp duty, Water, Electricity & Registration Charges are being levied. In this context, some developers like the Prateek Group have come up with the concept of all-inclusive pricing, giving full disclosure on details of carpet area, super area and super built area – clearly telling the buyer what he is getting for the money paid.
Builders sitting on huge inventory amidst weak sales have also been focusing on delivery and possession to win back the trust of buyers. Three prominent developers of NCR including Gaursons, Ajnara and Antriksh, have together given possession of 300 units across different projects during the Navraras, including ready-to-move-into units and old ones whose possession was pending. The Ajnara Group plans to offer possession of 5,000 units across several of its projects in the coming months. According to Deepak Kapoor, President of Credai Western UP, about 45,000 units across Noida and Greater Noida are likely to be handed over by March 2017, giving a big push to residential real estate.
Notwithstanding this positive sentiment, NCR players like Honey Katyal are not yet prepared to hazard a guess about the exact impact of festive season sales on residential real estate and express cautious optimism, saying that business during this festive season is expected to be better than the last, but a complete revival might take a year or more.