The festive season is on and Diwali – the year’s most-awaited festival and also an auspicious time to buy a piece of property — is also round the corner. Still, the zest of real estate developers, who always bet big on this season for revival of fortunes, seems missing this time. Very few new launches, no big ads in newspapers and also, only a handful of festive offers. This despite a number of industry studies suggesting that both residential sales and new launches have shown significant growth during Q3 2021. So, in this situation, the question that automatically comes to one’s mind is: Will this be a Happy Diwali for real estate or not?
According to industry experts, the data coming in about the resilience and vibrancy of the residential real estate sector during the festive season largely reflects the surging demand in the sector.
“What is remarkable is the fact that demand is peaking at a time when the COVID-19 pandemic is still on. Because of the exigencies and characteristics of the pandemic, housing has become the new focal point around which Indians are planning the immediate and long-term future. The festive season is traditionally a good time to buy homes, but this year it coincides with this new kind of demand. Many offers and discounts are generally announced if demand is perceived to be weak, and that is not the case this year – in fact, quite the opposite,” says Anuj Puri, Chairman, ANAROCK Group.
Arvind Rai, Director-Valuation Services, Colliers India, is of the same view. He says, “In the last 1-2 quarters, demand and prices for residential units have picked up, but buyers are playing safe to invest in ready-to-move inventories, which is limited. In ready-to-move projects, builders have limited and not so attractive units, leading them not to come up with any festive offers to sell those. Also, a majority of builders are struggling and putting effort and cost to finish the incomplete projects and they are further stung by the rising cost of construction. All these factors are keeping the builders away from announcing any festive offers to attract buyers.”
Moreover, developers are careful about turning out new inventory when there is a lot of inventory that still needs to be absorbed. “The relatively lower rate of launches this year is not reflective of low sentiment but of wisdom. Residential real estate, however, will do very well this Diwali and beyond,” Puri adds.
Diwali, in fact, marks an auspicious time to invest in a house this season as demand drivers, including low interest rates, stable property prices and lucrative festive offers, align to make a sweet spot for the homebuyer.
“With the homebuying sentiment warming up, property developers are leaving no stone unturned in luring homebuyers by prepping ready-to-move and under-construction homes with heavy discounts, freebies and convenient pre-payment plans. Realtors are confident of making a grand harvest this festive season, with the significance of homeownership on the rise, resurgence of business activity and speedy inoculation drive. However, fears of a third Covid wave have pushed developers to stay away from any new launches as they want to clear off pending inventory and are, thus, adopting a cautious stance. But it is unlikely to affect real estate sales during Diwali and beyond as there is enough housing supply to cater to the festive demand,” informs Kanika Gupta Shori, Founder and COO, Square Yards.
Whatever be the case, developers are optimistic about the growth prospects of real estate and hope that the festive season will be able to put the sector on a high growth trajectory.
“In the wake of Covid, the importance of owning a home has been reinforced. As a result, green shoots of revival have been witnessed in real estate in the past few months. The demand for homes has surged in various cities, including metros as well as tier II and III cities. All the factors are also favourable for home buyers, like lower interest rate regime, stable housing prices, among others. During Dussehra sales have been much better than the last few years and they are likely to continue in the run up to Diwali and perhaps beyond as well,” says Suren Goel, Partner, RPS Group.
Developers say the festive season has kicked off splendidly, with the real estate sector witnessing a boom. The industry is gearing up for a busy holiday season, and Diwali 2021 will undoubtedly be a pleasant and lucrative one for the sector. Prospective homebuyers who could not make home buying decisions due to the lockdown are now eager to conclude the deal before Diwali.
“This year’s festival season could be a good one for real estate developers. The good news is that prices have risen and demand has outstripped supply in the ready-to-move residential category for Experion properties, for instance. Prices of plots in our township at Westerlies, Sector 108, DEW, have appreciated by 20%, and by the time road infrastructure works are complete, another big growth spurt is being anticipated. Diwali sales are also expected to be robust due to easy loans, super active channel partners and the need for more prominent residences. Developers have also lined up new offers to benefit upbeat homebuyers,” says B K Malagi, CEO & Board Member, Experion Developers Private Ltd.
Suresh Garg, CMD, Nirala World also says that they are expecting good sales this Diwali as the Reserve Bank of India has not increased the repo rate for a long time, and home loan interest rates are at an all-time low. “The cost of property will go up due to the rising cost of raw materials, which is highest in the last 13 years followed by the maximum escalated price of steel, cement, copper, PVC, and fuel. However, meanwhile the demand for bigger units – 3 and 4 BHK homes — has increased by 60 percent in Noida and Greater Noida because of the pandemic. Homebuyers are preferring ready-to-move-in units and are buying property after checking the record of the developer in terms of quality of construction and delivery.”
As per a recent research report by ANAROCK, the nation’s top 7 cities have already witnessed a 113% YoY increase in housing sales (62,800 units) in Q3 2021, while a 98% rise was witnessed in new launches (64,560 units). Going by this trend, at least 10 to 15% growth is likely in housing demand in the ongoing festive period (October-December 2021) across the top 7 cities against the preceding quarter.
“If our current predictions hold true, the ongoing festive quarter will see at least 35-40% yearly rise in overall housing sales across the top 7 cities when compared to the same period last year. In Q4 2020, the top 7 cities saw total housing sales of about 50,900 units,” says Puri.