It is festive time again and, as always, the real estate sector has started betting big on it. More because this is an opportune time to clear the unsold inventory and recover most of the losses suffered during the Covid-induced lockdowns.
Thankfully, housing sales have started picking up in recent past due to a host of factors, including the rising demand for bigger and spacious homes. According to a recent report by ANAROCK, for instance, despite multiple headwinds, residential activity in Q2 2022 remained quite upbeat across the top 7 cities of the country, as close to 84,930 units were sold during the period while new launches stood at 82,150 units. That was the best performing Q2 since 2015, indicating robust demand and resilience of the sector, which augurs well for the festive season as well.
Santhosh Kumar, Vice Chairman, ANAROCK Group, says, “Housing sales in the upcoming festive quarter (October-December period) are expected to remain more or less the same as those in the corresponding period of 2021. As per ANAROCK Research, as many as 91,000 units were sold during the festive quarter – Q4 2021 (Oct.-Dec.). This year too, we anticipate that it would more or less remain the same despite an increase in the overall cost of property acquisition amid interest rate hike, developer cost etc. This reflects a positive trend.”
Despite the price rise by developers and a 140 bps repo rate hike by the RBI in recent times, housing sales continue to remain strong across the top cities as genuine buyers are coming forward to seal the deal. This trend may continue in the upcoming festive quarter as well because:
* Homeownership has become a compelling priority during the pandemic, and this trend continues.
* Despite three successive rate hikes by the RBI, interest rates continue to be lower than during the global financial crisis of 2008, when they went as high as 12% and above.
* Several new projects are now being launched by listed and large developers which is also attracting several buyers/investors. Homebuyers today are skewed towards branded players who in turn are reporting good sales in their projects.
* Also, there is ample ready-to-move-in inventory in the market for the discerning buyers and this may further push sales during the auspicious festive period (given that ready homes top demand). As per ANAROCK Research, there are more than 1.21 lakh ready units presently available for sale across the top 7 cities.
* Lastly, it is very likely that to maintain the current momentum of housing sales, developers will try and capitalize on the upcoming festive season and roll out attractive offers for the discerning homebuyers.
In view of the above facts, even as housing prices have risen by an average 5% across the top eight cities during Q2 2022 amidst rising prices of construction materials, both property consultants and developers remain hopeful that the festive season will push the housing demand further in the remaining part of the year.
Shveta Jain, MD, Residential Services, Savills India, says, “Buying a property during Navratri or the festive season is part of a strong belief system in our country as homebuyers consider this an auspicious and a good time to make a purchase of any kind. Being the festive season, developers provide deals and discounts which could include cash discounts, freebies, flexible payment options, offers on floor rise, etc to sweeten the deal further. The festive season coupled with lucrative offers from developers and financial institutions comes as an attractive period to invest in property.”
Echoing similar views, Pradeep Aggarwal, Founder & Chairman, Signature Global, says, “The festive season has been perceived as most auspicious for buying new things like car, homes or land. After the pandemic, this year has remained most promising as we have witnessed very good numbers across the industries in Q1 results. The approach and phenomena behind this trend is well-documented, owing to people’s religious beliefs and ideologies. It is especially a time which witnesses a superfluous investment in affordable and mid-budget housing as the feasible rates become even more reasonable because of discounts. It becomes monetarily plausible for a common man to bet on real estate during festive seasons owing to a range of offers given by developers. We are optimistic about the micro markets of Gurugram, ie. South of Gurugram, Dwarka Expressway. Both the markets have been successful to gauge the attention of perspective home buyers and we are bullish that the trend will continue in the next few quarters as well.”
Thankfully, even the buyer sentiment is up this time as close to 50% consumers want to invest in property. As per the findings of a joint survey by Housing.com and NAREDCO, 47% of respondents prefer to invest in real estate, while 21% prefer to invest in the stock market, 16% in fixed deposits and 15% in gold.
Vivek Singhal, CEO, Smartworld Developers, says, “Buyer sentiment for residential ecosystem looks very promising and has set record benchmarks owing to several macro and micro-economical factors. Quality of construction, infrastructure and robust government policies have given a fillip to housing demand. Not even metros, but Tier 1 and Tier 2 cities are also witnessing this trend. At Smartworld, we have seen phenomenal demand for our existing projects and huge expectation & wait for our new launches planned in the upcoming festive season.”
Shashank Vashishtha, Executive Director, eXp India, says, “Demand in the residential segment is witnessing a spike across India. With greater stability in personal finances, buyers are making a move and benefitting from festive season discounts. Segments like luxury and premium housing saw an upward trajectory too. Such events are indicating a shift in post-pandemic purchases.”
Though the recent repo rate hikes by the RBI have resulted into an increase in home loan rates and impacted homebuyers to some extent, this dampening effect is likely to be offset by the increased demand during the upcoming festive season. Industry analysts believe that the moderation in demand in the second quarter of 2022 is a momentary knee-jerk reaction and is unlikely to slow down the demand for housing sales later in the year. This is primarily due to the fact that in the wake of the pandemic, buyers have realized the importance of homeownership.
“In this post-pandemic era, buying a home has increasingly become the focus. Many potential homebuyers are now looking for comfortable, spacious homes, particularly in self-sufficient housing societies. It is widely assumed that societies can meet the needs of an entire family and provide a safe and secure environment. Such societies provide a wide range of amenities within their walls, reducing the need for people to leave,” says Rahul Singla, Director, Mapsko.
Some developers have also come out with exciting offers in a bid to woo the buyers and push up sales.
Trehan Iris, for instance, has rolled out a special investment scheme for investors and buyers interested in investing in Iris Broadway Greno West. It is Delhi NCR’s first hybrid mall and most ambitious project. It has launched an exclusive investment scheme ahead of the festive season. Under the scheme, the investment starts at Rs 25 lakh and gets a 12% assured return from day one. The scheme has a 12-year lease guarantee. The company is also giving an assured gift worth Rs 25,000 on every booking, as a token of appreciation for the sale to each buyer/investor.
Aman Trehan, Executive Director, Trehan Iris, says, “The festive season is considered an auspicious time to invest in property. Real estate developers and investors wait eagerly for this time of the year due to the positive sentiments surrounding festive investments. Considering the potential in the realty market of New Gurugram and Greater Noida West in Gurugram and Noida, respectively, we expect these micro-markets to witness continued increased traction in the upcoming festive season. These regions are already thriving due to their ample residential and commercial space, as well as their convenient access to various areas in the National Capital Region (NCR). Furthermore, New Gurugram and Greater Noida West are witnessing an influx of international and domestic brands, reflecting the promising growth in the region. Considering the present realty scenario of both the markets, we expect a strong and healthy festive quarter with increased sales.”
Property consultants say one of the biggest factors driving homebuyers today is the need to own a comfortable home which has been reinforced by the pandemic, lockdown, and the work-from-home/hybrid work culture. Owning a home has gained large importance among first-time home buyers as well as millennials as it provides a sense of security.
“Additionally, the market continues to be a buyers’ market where the interest from end-users is driven by the availability of suitable deals in cities as well as key micro-markets. We are also witnessing traction on second home purchases across segments in the residential property market with the price range going upwards from Rs 2 crore to Rs 10 crore,” informs Jain of Savills India.