Will Navratras herald good times for realty ? : The Tribune India

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Will Navratras herald good times for realty ?

The revival of commercial property and pick up in home sales amidst positive impact of reforms like RERA and GST, has somewhat bolstered the sentiment of property buyers, yet the rising interest cycle, lack of buyer confidence in under-construction properties and absence of novelty factor has cast a shadow over this festive season marked by the beginning of Navratras.

Will Navratras herald good times for realty ?


Vinod Behl

The revival of commercial property and pick up in home sales amidst positive impact of reforms like RERA and GST, has somewhat bolstered the sentiment of property buyers, yet the rising interest cycle, lack of buyer confidence in under-construction properties and absence of novelty factor has cast a shadow over this festive season marked by the beginning of Navratras.

Real estate is a sentiment driven business. Following a slowdown and large scale delivery defaults, thousands of home buyers are still embroiled in legal battles with the defaulting developers, especially in the worst-hit cities of Noida/Greater Noida and Gurugram in the NCR. As such, the buyer sentiment is still low and investors are missing from the market. As end-users call the shots, the biggest challenge before developers this festive season is to win back the confidence of prospective home buyers. As Prashant Tiwari, Chairman, Prateek Group and President , CREDAI Western Uttar Pradesh puts it , “Developers need to respect the end-users and be prepared to fulfill promises. ”.

Cash-strapped developers are desperate to sell in order to cut down inventory and generate cash. Buyers, on the other hand, have no desperation to buy, rather they are very cautious when it comes to investing in a property. They are particularly wary of touching under-construction properties due to development risks. Moreover, there are no special incentives on under construction properties as compared to ready properties with OC which have no GST. As such, this time hustling with a often repeated ploy —hurry, prices rising, too, won’t work. Like every festive season, this time too, developers are coming up with fancy ads, offering deals and discounts. Some are also participating in online property festivals of big property portals like Magicbricks.com and Housing.com to push sales. But this time the problem is that there is no novelty factor. Throughout the year, developers have been doling out good offers to offload high inventory. So there were Independence Day Special Sale or campaign like ‘Diwali se pehle Diwali’. Keeping a finger on the pulse of the market, branding and marketing expert, Kunal Banerjee says, “This festive season, customers are not swayed by fancy ads and offers, especially related to under- construction projects. What ‘s more, particularly young buyers are gradually shedding the 'auspicious time buying' pattern”. This has ample testimony in the response of 28-year-old Shramit Chaudhry, a TV news anchor, “ I live in Indirapuram in a rented accommodation but I don’t have to necessarily buy in the festive season. All that I want is that I should get a good deal with the safety of my investment”.

Glimmer of hope

But it’s not all gloom and doom. Developers are pinning hopes on the pick up in sales (registering 25 per cent hike in seven top cities in HI-2018), spurred by ready-to-move homes. Their hopes have also been kindled by a recent survey by Anarock Property Consultants which says that 24 per cent property seekers are ready to shed their wait & watch stance and take the plunge and buy property immediately.

Following RERA, developers have been focusing on project completions and have good inventory of ready homes to offer to buyers. Developers are also banking on increased buying by NRIs due to the devaluation of Indian currency. Says Niranjan Hiranandani, President, NAREDCO, “Investments by NRIs in Indian property have doubled from $5 billion in 2014 to $ 10.2 billion in 2018. Further, in view of recent regulatory reforms bringing in transparency in real estate, we expect still greater traction in NRI investments”.

Nishit Sharma whose company Reniso is involved in property management of NRIs says that the earlier trend of NRIs investing in luxury housing is changing as they are looking for high returns on their long- term investment plan.

But the big question remains — what will happen to high inventory of unsold under-construction homes? Will the developers be able to get past resistance from home buyers. Sudhir Pai, CEO, Magicbricks.com has a considered view, “Risks associated with under-construction properties are coming down, especially with many of these nearing completion, following developers’ focus on delivery, GST benefit on under-construction homes could be of huge value and help bring back buyers”.

RBI plays spoilsport

The rising interest circle , especially interest rate hike by banks before the announcement of RBI’s new monetary policy in the first week of October is also proving to be a dampener. Says Gaurav Gupta, General Secretary, CREDAI, Ghaziabad & Director SG Estates, “Just ahead of the Navratras a rate cut of 25 bps could have helped ease the pressure on the market, which has been balancing itself for the past two monetary policy repo rate hikes. However, with RBI maintaining a status quo, we expect the market to run with only a static demand in the short run”.

RBI plays spoilsport

The rising interest circle , especially interest rate hike by banks before the announcement of RBI’s new monetary policy in the first week of October is also proving to be a dampener.  Says Gaurav Gupta, General Secretary, CREDAI, Ghaziabad & Director SG Estates, “Just ahead of the Navratras a rate cut of 25 bps could have helped ease the pressure on the market,  which has been balancing itself for the past two monetary policy repo rate hikes. However, with RBI maintaining a status quo, we expect the market to run with only a static demand in the short run”.

— The writer is founder, Ground Real(i)ty Media

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