Realty developers hopeful about festive season after slew of govt reforms

Real-estate developers are expecting a slow but steady increase in sales this festive season on the back of a slew of reforms the finance ministry has taken over the past few days. Developers say reforms — including increased liquidity, creation of stress asset funds — will help in reviving buyers’ sentiments. 

According to industry experts, residential sales might rise between 5 per cent and 7 per cent this festive season, mainly between October and December, over last year’s. While real estate developers, especially in the north, are not expecting a Christmas miracle, they believe they would be able to sell a chunk of their already existing inventories by the end of the year. 

Positive sentiment to push festive sales

With the central government announcing a raft of measures over the past week or so, the festive season has already kicked in and is likely to see some uptick in housing sales. 

“This year, we expect sales to see a yearly rise of 7 per cent in the fourth quarter (Q4) of 2019, largely led by end-users waiting to take the plunge. If the government comes up with exclusive measures for the realty sector — expected anytime soon — it could boost the confidence of investors too,” said Anuj Puri, chairman, ANAROCK Property Consultants.

According to ANAROCK’s previous year’s trends of the festive quarter of each year, while Q4 of 2015 saw housing sales of 70,000 units, it plummeted more than half to 32,100 in Q4 of 2016 after demonetisation. 

With the Real Estate (Regulation and Development) Act coming into existence, the last quarter of 2017 saw housing sales rise to 46,224. It was finally in the festive quarter of Q4 of 2018 that housing sales were almost equal to those in Q4 of 2015 — with 69,900 units sold during the quarter. 

Northern market hopes for revival

According to major real estate players, there has been a sharp increase in enquiries over the past few weeks. There are more than 50 established developers with ready-to-move-in inventory in Delhi-National Capital Region (NCR) and nearby regions.

“The demand for investment and housing in transit oriented development regions is expected to rise. These are regions easily accessible via the Metro network and highways. Supply of ready-to-move-in homes will see enhanced demand,” said Parveen Jain, vice-chairman, Naredco and chairman and managing director (CMD), Tulip Infratech.

Southern market holds the key

Southern India will, however, be the one which would lead the way this festive season and help the real estate sector end the year on a cheery note. “The recent assurance by banks on the transmission of repo rate cuts to homebuyers, a move that would lead to reduction in equated monthly instalments for housing loans, will serve as a major incentive for homebuyers. We are hopeful this season will improve the sentiments and bring back fence sitters into the market. We feel residential real estate in South India continues to hold immense potential in the long term. Owing to a slide in the rupee, enquiries from non-resident Indians have increased across our integrated developments,” said Surendra Hiranandani, CMD, House of Hiranandani.

According to the 2019 data from ANAROCK Property Consultants for the first half of the year, 26,380 units were sold in NCR, while Bengaluru alone saw absorption of nearly 28,730 units, followed by Hyderabad with 9,830 and Chennai with 7,550.

Expect freebies

The latest curb on subvention schemes by the National Housing Bank will do away with the flexi-payment option plans by most developers.  “On analysing latest trends, it emerges that waiving the goods and services tax charges (5 per cent of the total cost) and stamp duty and registration charges are among the most popular deals already on the table for prospective homebuyers. This is largely popular in Mumbai Metropolitan Area and Pune and also in NCR. In Bengaluru, upfront discounts such as Rs 5 lakh on three-bedroom homes are being rolled out by builders. 

Few flexi-payment options like ‘pay 10 per cent now and nothing for the next 18 months’ are also being floated by a few builders,” added Puri.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel