Real-estate Festive Shopping
Do buyers still wait for the festive season to invest in property or is it a thing of past? Also, are realty developers adopting new marketing strategies rather than the usual freebies, discounts and incentives? Realty Plus studied the trend this festive season.
The period from of August to December, are the auspicious months to invest in property because of the various festivals during this time. In fact, a lot of positives before the festive months including the Real Estate Regulatory Act had boosted the sentiment of home buyers.
Developers floated enticing benefits and concessions in the hope of increased sales. Even banks and financial institutions tapping into this trend offered lucrative home loan schemes, low interest rates and flexible payment plan, among others.
What’s more, given the prevalent slowdown, developers explore avenues such as partnering with online marketplaces like Snapdeal, Magicbricks etc. to sell properties. Not surprisingly, the year saw unprecedented activity on online property portals that organized shopping carnivals presenting special project launches and exclusive offers from builders.
New residential unit launches
The number of residential project launches in July-September quarter rose 20% from a year ago across top six property markets in India. Housing project launches in Mumbai, Bengaluru, Chennai, Pune, Noida and Gurgaon were a little less than 25,000 units making it about 67,000 so far for the year 2016, showed a Colliers International India report.
Residential market in the western India recorded maximum number of launches in Mumbai and Pune with 28% and 23% share of the total unit launches during the quarter, respectively. This was followed by Bengaluru at 17%, Noida 16%, Chennai 9% and Gurgaon 7%. Even, Gurgaon and Noida, the worst performers for last three quarters, witnessed few new launches during the quarter in the wake of upcoming festive season.
According to property consultants, factors such as the strong office, the festive season and loweringinterest rates are likely to support housing market in the coming months.
Driving the Sales
The conventional slew of offers from builders ranged from gift vouchers for home furnishings and modular kitchens, free car parking and gold coins to international tripsand giving away two-wheelers on every booking. Builders offered discount on basic sale price and on booking as well as flexible payment plans with bookingamount as low as 5% of the total cost. But how have these schemes worked out for promoting sales?
Though, luxury residential developments constituted majority of the unit launches, affordable and mid-end housing projects were the most in demand across the country and the trend is expected to continue. Inquiries increased and there was some sales velocity. Given the background of RERA, the overall sentiment among the buyers was cautious but positive.
According to Samantak Das, chief economist and national director of Knight Frank India, “Though sales picked-up marginally during festive season, for sustainable growth, we need to bring back the confidence of buyers. The developers should focus on timely delivery as well as correcting the price points.”
Looking beyond offers
Till few years ago, festive season meant only new project launches and pre-launches. However this year the focus was on selling the finished product. Many developers stayed away from introducing special offers or even any new launches. Instead they showcased the location, amenities and social infrastructure, approval status, completion stage of the projects. Many even offered assistance in home loan approval, getting the paperwork done for the buyer.
As a large number of developers had completed their projects launched in 2010-2012 with completion certificates, they followed the marketing strategy ofclearing those during this year festive season. Given the scepticism of long delays, the buyer’s inclination too was towards projects that were either complete or nearing completion.
The Buyer’s Market
The sales in the housing segment this festive season was driven by the ready inventory, decline in interest rate and some drop in real estate prices. Though the quoted price from developers remained the same, discounts were available for actual buyers. According to Akshit Shah, AVP – capital markets research, Jones Lang LaSalle (JLL) India, “The hypothesis that residential property sales pick up markedly during the festive season, does not hold true now. The fact that the average age of home buyers has come down from the mid-50s to the mid-20s, the younger generation prefers to take informed decisions and focus on bargaining opportunities rather than just the auspiciousness of a day.”
The New Trends
The season was marked by aggressive marketing strategies by developers like money back with penalty in case of non-delivery, no annual maintenance charges for a few years, no registration charges, no EMI till possession, fixed monthly rental till possession,home warranty and all-inclusive pricing with no hidden charges, to name a few. .
For the first time in this festive season, the auction of homes at the all-India level was done by JLL India in association with Housebolo.com, guaranteeing quicker, easy and transparent sales with efficient pricing.
Another significant trend was the presence of more end-buyers than short term investors and affordable luxury homes giving momentum to sales. The investors seemed to prefer commercial property rather than residential for better prospects of appreciation and return.
Indeed, festive season offer great opportunities to the builders, banks and buyers and the surge in buyer’s sentiment bodes well for the real-estate sector. But with confidence of buyers still not restored and implementation of real-estate reforms a while away, a sustainable recovery of residential real-estate will take time.
While many home seekers considerfestivals as an auspicious time to invest in property, there is a growing number of those who do not wait for these seasonal offers. As a matter of fact, due to sluggish sales and inventory of high unsold ready apartments, the market is flush with subvention schemes and discounts all the year for genuine buyers. But of course, the festive offers can be a cherry on the cake. The only caution is the proper research before investing