Developers Expect Festive Revival In Property Market

A spurt in enquiries for apartments and a spike in flat bookings ahead of Diwali have raised hopes for the otherwise stagnant real estate industry. And developers have thrown in discounts to draw homebuyers.

Mumbai-based Lodha Group said it has already done business of over Rs 400 crore in the past 15 days and is seeing good traction for its projects. In September, nearly 10,000 prospective homebuyers reached out to the developer. The number is expected to go up by 30 percent this month, said Prashant Bindal, the developer's chief sales officer.

The realty market has been hit by a slowdown for the last three years. It was particularly sluggish in the past year due to demonetisation, implementation of the Real Estate Regulatory Act and the Goods and Services Tax.

Real estate consultants and experts say the industry has weathered the policy hurdles. After demonetisation, the market has already improved by 28 percent, said Pankaj Kapoor, managing director at real estate rating and research firm Liases and Foras. “And in the coming quarter, a jump of 30 percent is expected.”

RERA, which aims to protect the interests of customers and improve transparency in the real estate sector, is adding to confidence among homebuyers, said Ashutosh Limaye, head of research at real estate services firm JLL India.

The affordable housing sector has generated the maximum traction, helped by the government's thrust on its flagship programme ‘Housing for All by 2022' and lower interest rates, said developers and experts. The spotlight has moved to sub-Rs 1crore projects in cities and towns across the country, they said.

Also Read: India's Home Sales Recover With Mumbai Vaulting to a 7-Year High

Amit Wadhwani of Sai Estate Consultant, a realty player from Mumbai that is mostly into the affordable segment, said customer visits and enquiries have gone up threefold in the past 10 days.

A sharp rise in home loan queries validate the renewed consumer sentiment. Harshil Mehta, joint managing director at Dewan Housing Finance Corp. Ltd., said the company is expecting more business in the festive season. “With the government push for affordable housing and the MIG (middle income group) -1 and 2, there is a strong tailwind in terms of off-take in the affordable housing segment.”

The festive season, which is usually marked by new launches, is likely to be different this time for the market as fewer projects have been unveiled. Last year, the industry saw 39,100 new launches in the festival period, according to data compiled by ANAROCK Property Consultants. The figure dropped to 11,008 as of September 30, it said.

This is unlikely to affect supply as there are too many unsold blocks, said Kapoor of Liases and Foras. “Across the country, the inventory is 11 lakh units and builders are sitting on an inventory pile-up of four years.”

Most enquiries this time are for completed projects, said developers. “People are psychologically comfortable where occupancy certificate has been obtained for the project,” said Niranjan Hiranandani, chairman and managing director, Hiranandani Group.

With the bustle back in the business, builders are enticing customers with offers. Kapoor said that developers are offering discounts of 10-20 percent as they expect a large number of enquiries to translate into sales.

Luxury Home Sales Still Struggling

Wadhwani of Sai Estate said that the luxury apartment business, however, is struggling because the public is still optimistic about a price correction.

Despite the zing fuelled by potential homebuyers, the market is still to see its heyday. To bounce back fully, it will likely take another a year or maybe more, till new launches are back. “Currently the market is in a wait-and-watch phase,” Kaizad Hateria, chief sales manager at real estate company Rustomjee, said, “And, this will last some time.”

Watch this discussion with Niranjan Hirandanai and Sameer Jasuja of PropEquity on a possible revival in the property market due to festive demand.