Real estate sector on a revival mode, what homebuyers should keep in mind

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Updated: Apr 12, 2017 1:45 PM

With RERA implementation around the corner and many pro-consumers policy announcements, the real estate sector is hinting towards a rebound.

With RERA implementation around the corner and many pro-consumers policy announcements, the real estate sector is hinting towards a rebound.

Slowdown or recovering? These are the questions that play on an investors mind when he steps out in the market for a property investment. With RERA implementation around the corner and many pro-consumers policy announcements, the real estate sector is hinting towards a rebound. The residential real estate sector is gradually recovering from a prolonged slowdown, especially after the last year’s demonetisation move, experts said.

According to property consultant JLL India, primary sales by reputed developers after the demonitisation announcement were less affected, the secondary sales market definitely took a major hit and saw a 30-40 per cent decline. However, there is a gradual return of sentiment and the primary sales market is beginning to look healthier again.

“The level of revival is certainly not spectacular, but inquiries from genuine buyers are translating into actual sales when it comes to competitively-priced projects by good developers in good locations. Among pure investors, there is now a realization that prices will not go down further and that this is a good time to make investments and book decent future profits. They are aware that a minimum investment horizon of 4-6 years is essential – but these are definitely serious investors and not short-term speculators,” Ashwinder Raj Singh, CEO – residential services, JLL India said.

What factors are working in favour of the real estate sector? There is a general awareness that prices have bottomed out and that the schemes and incentives developers are offering provide a sound rationale for buying or investing now. Along with this, there is an adequate supply of ready-to-move options for the more cautious and risk-averse investors. Also, implementation of RERA (hopefully from May 1), will reinstate confidence among buyers and investors as it safeguards them from errant developers.

Sales in new projects – especially those with ready-to-move options – have picked up, but not spectacularly so. “Whilst there was a slowdown in sales post the demonetization, the activity has still not picked up to desired levels currently as buyers, especially HNI investors, are currently on the look-out for ‘good value’ deals because they know that many local developers are facing cash-flow problems. Hence, many of these developers are offering package deals that include waivers of fees and charges, add-ons in the form of parking, club membership, etc. and even very favourable payment terms that work out to an attractive discount to current quoted prices, which have been largely stable since the last year. However, where developers recently launched projects, keeping in mind the genuine demand from end-users, such as affordable sizes and ticket prices, the sales momentum has been good. Most of the developers are now earnestly looking at catering to the affordable housing segment as the recent government sops have made the segment attractive,” Siddhart Goel, Sr. director, research services, India, Cushman & Wakefield said.

In the current market scenario, homebuyers should exercise caution and go for builder/developers who have a verifiable track record for on-time project completions. They should look at the commitment/capability of developers to complete their existing projects in addition to the pricing offers during their decision-making process. Besides this, one should ensure a waterproof sales agreement which clearly outlines what you are buying and protects your interests at all levels. This is especially important if you are investing in an under-construction project.

And finally, as JLL’s Ashwinder Raj Singh puts it, “Be aware that there is a lot of supply on the market, so your chances of finding the right product at the right price and in the right location are very high right now. Do not compromise on your expectations.”

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