There are distinct pointers that suggest that the Indian real estate market is in recovery mode in the current festival season. Developers like Gaursons, Supertech, Amrapali, Unnati Fortune Group, KV Developers, etc, say that not only enquiries but transactions too have picked up by around 15% in this period.
In order to improve sentiments and instil confidence in buyers in the real estate market, which is plagued by delays in giving possession to end users, NCR-based Gaursons India is giving possession of more than 9,000 units in its flagship projects, Gaur City and Gaur City 2, in Greater Noida West (formerly Noida Extension).
Manoj Gaur, managing director of Gaursons India, said that the entire exercise will be completed in the next 12 months.
Anshuman Magazine, MD of CB Richard Ellis, South Asia, said that Gurgaon, Noida, and Bangalore saw stable demand and limited supply addi tion during the period. However, homebuyer demand continued to remain focused on mid-end and high-end projects, largely concentrated in the emerging micromarkets of Noida, Greater Noida West, and New Gurgaon in the Delhi NCR. Prices remained stable across most locations-barring central locations in Chennai, which saw an 810% rise over price points in August, Magazine said.
It is anticipated that new project launches will increase over the next few months on the back of the festive season, a revival in economic sentiments, and the tax incentives introduced by the new government.
Consultants say that prices in real estate have not seen the kind of appreciation that was expected during the festival season. This has left a substantial scope of appreciation in the prices once the markets fully recover.
Anuj Puri, chairman and country head of Jones Lang LaSalle (JLL), India, said that it is more than evident that the festival sea son was not able to fully harness the benefits of market recovery.
This is because the events that have catalysed the recovery-namely , the new government at the Centre, its pro-business policies, the encouraging Union Budget, and the provisions it has announced favouring real estate--will need more time to bring their benefits to bear on the market, Puri said.
The RBI has held on to current interest rates in order to firewall the economy against further inflationary trends. It will take several more months for the market to get into perceptible forward momentum again; so, the festive season did not bring the kind of momentum that was hoped for, Puri said.
Puri, however, ruled out any further corrections in prices. In fact, developers also argued against any further possibility of price correc tions. Developers said that at the present selling prices, their profit margins are already close to around 5%, which would not cover any further inflationary pressure due to the delay in construction.
Puri, too, argued that while demand existed, it is still held in abeyance by various economic factors, including the natural lag between the announcement and implementation of government policy catalysts.
Reduced pricing could potentially induce some further sales momentum in certain pockets, but it is not likely to happen as developers are not keen on signalling a correction, especially when demand is waiting in the wings, Puri said.New projects are in any case being announced at lower rates, which will lead to a demand-supply gap once the sector revives.
But, at the same time, in order to improve the cash flow conditions, developers have been offering selective discounts and incentives, the success of which has varied across cities and locations. Those with greater holding power continue to wait for the market to pick up so that sales velocity will accelerate.
The special promotional schemes offered by developers to customers have provided end users a good opportunity to own a house. Even for investors, this is an opportune time to invest in the real estate with around 20% of the sale price.
As the rest of the amount has to be paid at the time of possession only, investors can make an exit with handsome profits at that time.
Consultants and developers hope that the confi dence of buyers in the economy will soon be back and they would be ready to take the plunge in the market.
Developers hope that the festival of lights will lift the darkness shrouding the realty market and that investors and end users will be back.
Any revival in the market will earn the first mover handsome returns.
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