Affordable offers push festive home sales up 15%
Home sales in Indian cities jumped up to 15% during the Dussehra and Diwali festive season as direct discounts offered by developers on affordable homes found a lot of buyers.
According to industry insiders, housing sales increased 10%-15% year on year this festive season although the resale market is still waiting for any signal of an uptick. The growth, however, comes on a low base because the housing market had a dull festive season last year.
“Discounts were available and that did work to prompt fence sitters to act,” said Pankaj Kapoor, managing director at property research firm Liases Foras. “Affordability was the most important factor that worked for some developers and projects. In Mumbai, properties launched with price tag between Rs 1-2.5 crore gained the traction, while in extended suburbs across Mumbai metropolitan region Rs 30-70 lakh price category worked,” he said.
In Noida near Delhi, sales in the primary market in October and November have been good.
“The months of October and November have seen a 20% rise in business for us compared to the previous few months,” said Pawan Jasuja, MD at property consultancy Finlace Consulting. “People today want to buy from builders who have been able to project a stronger brand, those who have shown stronger delivery and possibly also a small reduction in price,” he said.
Jasuja said buyers mostly opted for ready-to-move in properties as the difference in the price of these and those 6-12 months away from completion has shrunk.
Another Noida-based broker Rajni Naggar said she sold at least 20% more apartments this festive season than she did last season. “There is demand in the market for sure. It is just that people are scared,” she said. What also sold this festive season, Naggar said, are homes in new affordable projects that are offering subvention schemes.
Abhay Khemka of Gurgaon-based real estate brokerage Khemka Investments and Properties said sales in the last few months have been good in Gurgaon, but in pockets.
“The Golf Course Road and Sohna Road areas, for instance, have seen buyers picking up completed properties, but on Golf Course Extension Road, investors and end-users have bought apartments in projects where they see a good proposition in terms of product, reasonable pricing as well as a soft payment plan coming from the builder. Some builders have also launched very affordable projects in the Sohna area, which have sold well in the last two months,” he said.
In Bengaluru, apart from affordable and mid-income houses, even premium properties have seen an uptick in sales.
“This year, the festive season has proved to be better than last year. We witnessed steady inquiries and conversions in the luxury residential projects ranging from Rs 5 crore onwards. We still have some transactions in the due-diligence stage as of now,” said Shabeer Sait, executive head of operations at Irshads Property Matters.
According to property consultant Colliers International, positive demand was witnessed in the primary market and this demand was inclined towards the projects where developers were offering flexi payment plans and competitive pricing. “New projects were launched at around 15 – 20% below the prevailing offerings in the secondary market,” Colliers said in a report.
Although housing sales has shown an uptick during this festive season, it is more to do with launches at competitive prices and property prices are unlikely to move up given the existing inventory levels, experts said. “Sales will have to increase manifold and precisely around 400% to see inventory levels moving to a comfortable zone of 8-10 months. Currently, inventory pile up across top eight cities is at 40 months,” said Kapoor of Liases Foras.
Brokers said homebuyers are showing preference for brands due to uncertainty over project completion and are probing more about the builders’ financial health to ensure on-time delivery.
Although sales during festive season have received a leg up, performance of shares of real estate companies is expected to remain company specific and analysts suggest a bottom-up approach in stock picking.
“A few good project launches cannot be seen as a broad-based improvement in the market as most of this can be attributed to specific brands, locations and pricing,” said Arun Aggarwal, real estate analyst at Religare Securities. “Here onwards, well priced stronger brand would do well while broad market may take some time to revive,” he said.
In the last three months, BSE Realty Index has risen over 5.4% with shares like Ajmera Realty & Infrastructure, Housing Development & Infrastructure, Oberoi Realty, Godrej Properties and Sobha gaining 9-69% during the same period.