The upcoming festive season is expected to spoil customers for choice in the residential real estate sector. After witnessing tepid launches momentum for several years and last year’s season getting hit by the pandemic, 2021 will see some big projects getting launched across the country.
As per Anarock Research, current trends suggest that there will be at least 30-40% growth in both new launches and sales in the ongoing quarter (July-September) as against the preceding one. As many as 24,600 units were sold across the top seven cities in Q2 2021, while 36,250 units were launched in the same quarter.
In Mumbai Metropolitan Region (MMR) alone, consultants expect 2 million sq ft of launches in the coming festive months with 25-30 big launches planned, having inventory worth Rs 3,750-odd crore. After a long hiatus, the good news is that branded developers are entering the market. Prestige Estates Projects is launching three projects in Mumbai’s Byculla, Mulund and Chembur neighbourhoods, another south-based developer Puravankara plans to launch two, while Oberoi Realty is understood to be launching a project in Thane. Sunteck Realty has also lined up launches in the existing Oshiwara District Centre and Naigaon projects.
Ritesh Mehta, senior director & head (residential services & developer initiatives), western India, JLL told FE that the launch pipeline is particularly looking strong in MMR because developers have taken advantage of government’s concession scheme under which if developers gave upfront amount for all the approvals needed for their projects, they got a 50% concession on the same.
“Last year, developers were selling at a cut-throat price and were undercutting their inventory. So, the money that has got accumulated as a result of higher sales, they have incurred on acquiring approvals for the new projects. This means we will see lot of launches this year,” he said. Also, since all the approvals have been acquired, from the customers’ perspective, the major thing is they would be relieved in terms of the certainty of the projects. Approval costs typically form 20-25% of the project cost, which came down to 12-13% as a result of the concessions.
Most of the launches are expected to be in the ticket size of Rs 1 crore to around Rs 2 crore, with preference for larger houses continuing and developers offering an extra half or one room catering to the new requirement for study or work purposes.
Anuj Puri, chairman, Anarock Group said, “With Covid-19 cases relatively under better control for now and the vaccination drive gaining more acceptable saturation, we anticipate housing demand and supply to see an uptick in the upcoming festive season. While some developers have already increased property prices on account of rising input costs and improved sales traction, many continue to offer deals and discounts”.
However, the element of direct price reduction has disappeared now; and offers and indirect discount being offered are to the tune of 1-3% of property value. Vivek Rathi, director (research) Knight Frank India said, “Most of the discounts now are in form of an extended stamp duty relief to assuage concerns of consumers who have missed the bus on the limited period stamp duty cut in markets like Mumbai and Pune”.
In a reversing trend, the negotiation power of buyers are now diminishing and the market is gradually turning to a sellers market. The discounts and freebies offered by developers will be dismal because they have incurred lot of money in acquiring approvals and land. “Both costs are already incurred and have covered the cash flows and thresholds of last year, so if Rs 10 was the quoted price and they were closing at Rs 7 last year, they are closing at `9 and nothing below that,” Mehta explained. However, the prices have not changed much yet.
Kamal Khetan, chairman and managing director, Sunteck Realty said that while the company is not announcing any discounts or price cuts, it would be launching phase-wise projects in the coming months.
Similarly, in NCR, developers are gearing for a good festive season. Saransh Trehan, director, Trehan Luxury Floors said, “We are launching 300 luxury independent floors at Sector 67 and few other locations in the heart of IT City Gurugram. We are also offering flexi-payment plan for prospective homebuyers. We expect a good response from customers. We are targeting to sell entire 300 units in the next few months riding on pent up and festive demand coupled with very low interest rate on home loan”.
(With inputs from Rishi Ranjan Kala in Delhi)