Real estate market remains sluggish, but developers betting big on festive sales

By: |
Published: October 26, 2019 11:13 AM

In spite of a slew of reform measures taken by the government, over the past few years, the real estate sector has been grappling with subdued demand.,

real estate, real estate investment, festive season, festive sales, Diwali, developers betting big on festive season, Property developers like always are betting big on this festive season for revival of their fortunes.

Buyers usually prefer making big-ticket purchases during the two-month festive period as it is considered auspicious by a majority of people. Sales of all kinds of things and commodities soar during this period of the year — including real estate. Even in a sluggish market, the festive season offers a hope of better sales off-take for developers. However, translation of festivity into real estate sales is a function of various subtleties such as availability of lucrative deals, suitable inventory, buyer sentiments, and investment lucrativeness of this asset class, to name a few.

Current Market Dynamics

In spite of a slew of reform measures taken by the government, over the past few years, the real estate sector has been grappling with subdued demand, primarily fuelled by multiple issues both on the supply as well as demand side of the business. On the one hand, developers are suffering from liquidity crunch in the wake of waning sales and limited borrowing options, while on the other hand, buyers (end-users & investors) are suffering from the issues of non-delivery/ project delays and lower returns from the asset class. This has limited its lucrativeness and the options for potential buyers.

How good or bad will this festive season be for real estate?

In the present market dynamics, buyers are left with very limited options to choose from. Since returns from the residential asset segment is modest, buyers seeking returns would have options to look at commercial assets such as office & retail. “However, given the relatively higher ticket prices and limited borrowing options for this segment, not all investors evaluate these options. Therefore, end-users, seeking housing units, are expected to focus on ready-to-move-in options, while a certain segment of buyers might also evaluate booking into the initial stages of a project, especially with credible developers and track record of delivery,” says Ashutosh Kashyap, associate director – valuation and advisory services at Colliers International India.

What is the catalyst?

Owing to reformed corporate taxes, some developers are passing on the margins in the form of tangible festive season offers such as upfront discounts, GST waivers, free club house membership, additional free car parking charges, free home furnishings, etc. Such offers are likely to lure buyers and induce purchase decisions.

Income Tax Refund Status 2019-20: How to check IT refund status online in 5 minutes!

“The overall impact of the festive season in the present context, where in there is an evident slowdown in the economy, is expected to be less pronounced than the previous years as buyers of all segments would exercise caution in their big-ticket expenditure. Moreover, owing to stagnated real estate capital values for a prolonged period despite increased borrowing and input costs, very few developers have room for floating tangible festive season offers,” says Kashyap.

Developers’ Take

Whatever be the case, property developers like always are betting big on this festive season for revival of their fortunes.

“Festivals are considered to be an auspicious time in India for making big-ticket purchases and investments. Therefore, easy payment schemes and other incentives are the appreciation gesture offered by developers on the purchase of one of the biggest investments in the buyer’s life,” says Li Qiongjia, director, Risland (North India).

Risland (North India) has come out with a special payment plan for homebuyers at its South Delhi-based luxury housing project Sky Mansion. “Under the scheme, buyers can pay 10% of the subtotal price as the booking amount, and the other 10% of sub total price is payable within 180 days from the date of booking. The buyers can pay the rest 75% on the application of OC and the last 5% along with the other charges can be paid at the time of possession of their apartment,” adds Li Qiongjia.

Ashish Sarin, CEO, AlphaCorp, says, “Buying a home at auspicious times like Diwali is believed to bring in prosperity and opulence in life. Therefore, people wait for this time of the year and also look forward for lucrative deals and schemes in the market. Every year, developers also plan for the festive season months in advance and roll out different schemes and discount offers. This year we have introduced a scheme in which buyers can get a free club membership and win prizes worth Rs 4,00,000 in a lucky draw at Alpha International City, apart from winning iPhone X and Paytm cash as part of our referral scheme.”

Similarly, at its MeerutOne project, AlphaCorp has launched a scheme under which buyers can get free interior worth Rs 2.5 lakh apart from getting a chance to win attractive prizes in the lucky draw.

Amir Husain, president-sales & marketing, Orris Infrastructure Pvt Ltd, says, “This is the perfect time of the year for homebuyers to invest in the real estate sector as the festival season has already set in. The housing sales fare better during the festive quarter than the other quarters of the year. The reduction in corporate tax will incentivize corporates to pump up investments. Also, the additional discount on the interest rates while taking a home loan of less than Rs 45 lakh till March 31, 2020 will help in increasing the demand during this period.”

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1How frequently should you review your mutual fund portfolio?
2Covid-19 provides a big boost to online transactions, video KYC adoptions
3SIP inflows hit 22-month low in July at Rs 7,831 crore