To align with this year’s festive season, real estate prices have moderated to a significant extent in many markets. Also, developers have been proactively rolling out attractive offers and schemes, which have ensured that the 2016 festive season presents a visibly improved picture in residential sales.
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A vast number of fence-sitters have been returning to the market with firm purchase decisions. These are primarily buyers who were awaiting price corrections and offers from developers which make financial sense. Both of these have happened, and sales have increased by as much as 10-12% so far. In cities like Pune, which still offer favorable price bandwidths to end-users and investors, we have seen an increased sales velocity of 15 percent in well-connected growth corridors like Undri-Pisoli, Ambegaon, and Bhugaon.
The speed of sales will increase by 12-15 percent in most markets by the peak of this year’s festive season. All-inclusive pricing packages which include VAT, stamp duty and registration have been the most successful offering by far, as these negate the financial uncertainty of hidden costs. Another factor that has helped increase sales velocity is developers’ readiness to bargain with genuine buyers so as to achieve a price that works for both. Another influencing factor has been faster infrastructure development in emerging locations, thereby rendering them more attractive as residential destinations.
That said, not all projects have been performing equally. With the recent media spate surrounding illegal constructions in cities like Pune, buyers are now showing a marked preference for projects by reliable, reputed builders in superior locations. Also, flats that are either ready for possession or within six months of possession have been drawing the most amount of interest. The fact that the increased demand is almost exclusively for projects by well-established developers is significant – buyers and investors are in no mood to gamble this year.
The increased sales velocity of this year’s festive season will probably not sustain during the remaining part of the year, but there is absolutely no doubt that buyer sentiment has improved significantly. To sustain the forward momentum, builders will have to complete their ongoing projects with convincing speed and provide all the promised amenities to satisfy their customers. There has always been good demand for properties priced within the bandwidth of Rs. 35 to 50 lakh; however, we are now seeing a resurgence of interest even for luxury offerings priced in the higher bandwidth up to Rs. 80 lakh-1 crore, as buyers and investors can see that the real estate market appears to have stabilized and bottomed out.
There is a marked improvement in overall sales velocity, and we expect to see a further turning point will come by mid-2017 and even earlier if the annual Union Budget is preponed and announces decisive benefits for the middle class.
CMD – Amit Enterprises Housing Ltd.