Diwali fails to light up realty fortunes

Vinod Behl

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Reeling under sale slump and sitting over huge unsold inventories, real estate developers used every possible marketing trick in their arsenal to excite indifferent property buyers to come out and invest in this festive season but it did not turn out to be a cracker of Diwali.

Some desperate developers had even reduced the booking amount to as low as Rs20,000 and upfront payment as low as 2-5 per cent of property value with no EMI till possession, in order to woo the prospective home buyers. Besides standard freebies like cars, white goods, modular kitchens, gold coins, foreign holiday, car parking, there were perks that included stamp duty and registration-charge waiver, no EMI till possession besides lucky draws.

Even big developers were not lagging in dishing out freebies. Tata Housing made mega offer of a complimentary extra room on buying a 2-room flat. And there was this innovative offer of a Rs6 lakh home in a suburb with job offer for a female family member by a Mumbai developer.

To dispel the fear of delayed delivery, Bharat City developer in Ghaziabad offered rent-free accommodation till possession in its Phase-1 project to buyers of property in its Phase-2 project.

A Noida- based developer was promising a Rs15 per sq ft per month compensation for delayed delivery for its luxury housing project in Greater Noida West.

The key real estate marketing trends of this festive season included online home selling, ready-to-move homes, discounted property, attractive payment plans, interest waiver, assured returns and no new launches.

Online home selling: What started as an innovative concept in 2013, with Tata Housing, selling their homes in Google’s Great Online Shopping Festival, caught up with other developers due to agonisingly slow sale of homes in the past two years.

Realising the huge potential of online marketing in reaching out to prospective home buyers, in a faster and cost-effective manner, developers not only partnered with property portals like Magicbricks.com,Proptiger.com, Indiaproperty.com but also with leading e-commerce portals like Snapdeal.com to launch Diwali home sale festivals, offering discounts and freebies. So much so that even the apex body of developers — MCHI-CREDAI, had partnered with property portal, Housing.com to organise a 25-day-long Virtual Property Expo, showcasing 300 projects across India. First time, the all- new concept of ‘Social Sell’, was tried out as Tata Housing tied up with Facebook to sell leisure homes in Goa.

Ready-to-move homes: With home buyers fighting shy of investing in under- construction property, due to large-scale delivery defaults, a number of real estate developers and brokers with large unsold inventory, had been focusing on marketing ready-to-move homes. Such options are largely available in the Noida and Gurgaon markets which have the largest inventory of unsold homes.

In NCR, multiple living- ready homes options are available in Noida, Noida- Extension, Noida Expressway, Yamuna Expressway, Gurgaon. Home buyers were lured to invest in such properties as there was no fear of delivery delays. Besides developers like Jaypee Group, ABA Corp, The 3C, Mahagun, Supertech, Ajnara, Aditya, Gaur Housing, ATS, Paras Buildtech, Amrapali,VVIP, Paras Buildtech, Raheja, Paramount, Today Homes, offered attractive prices with friendly payment plans for these resale properties.

Discounted properties : With slow growth in salaries in comparison to rise in property prices, coupled with poor job market, leading to low affordability, developers had realised that key to home sales lies in making property affordable. But breaking price barrier was not easy for most developers in view of low margins and as such price discounts were far and few and not substantial to woo buyers. But some developers hit upon the idea of reducing unit sizes with varied sizes to make homes affordable. In one of the worst hit markets of Gurgaon, developers like the Raheja group were offering independent floors for less than Rs2500 per sq ft in its Aranya Green City project on Sohna Road. Several developers availing Haryana government’s ‘Affordable Housing Policy’, were able to offer 1BHK/2BHK homes at Sohna, Gurgaon, for as low as Rs13 lakh and Rs18 lakh respectively. At pan-India level, developers also took to innovative marketing concepts of ‘All Inclusive pricing’ and ‘One Nation. One Price’, offered by Tata Housing to woo home buyers.

Attractive payment plans: To lessen the impact of high EMIs, developers had been offering attractive payment plans to push sales. But since these subvention plans could not create much impact, some developers like NCR’s Trident Realty, went to the extent of offering 2:98 plan (just 2 per cent down payment with no EMI till possession).

Some developers further sweetened the subvention deals like Raheja Developers for its four projects on Dwarka Expressway, Gurgaon, was offering 10 percent discount and lease guarantee. Unnati Future Group, had come up with free club membership, zero PLC charges free car parking for Sector 119 Noida project while Indosan Infra was offering assured exit plan @ 15 per cent per annum.

Interest waiver : Since most developers were not providing relief on property prices, some of them had taken to home loan waiver to lessen the burden of home buyers. They tied up with lenders to offer subsidised home loans. Developers like NCR’s Sikka Developers, was offering home loan for its Noida project at as low as 5 percent p.a against the average existing home loan rate of about 9.5 per cent p.a.

Assured returns : Fund- starved real estate developers were luring property buyers with assured return (9-14 per cent) as this is the easiest and cheapest source of fund raising for them without any collateral. However, for property developers, there is risk about the safety of their investment, as they have to pay full or substantial part of property value up front and they can’t approach any regulator in case of payment defaults on the part of developers, particularly as such defaults have come to light in the past.

No new launches : It has always been a practice with property developers to launch new projects at attractive prices during festive season to increase home sales. But this time, the cash-strapped developers, as part of their marketing strategy, avoided to launch new projects as homebuyers were refraining from investing in under-construction projects to safeguard their investment in view of massive delivery defaults by developers.

All these high-pitched marketing initiatives could hardly light up Diwali this year as demand was not translating into sales due to unaffordable property prices, high interest rates, economic instability amidst high inflation, job insecurity, stagnant salaries and above all, buyers’ fear about safety of their investment in view of long delays in delivery of property. — IANS