The period around Diwali is usually the best sales time for Indian Realtors. But this festive season, volatile markets, double digit interest rates and poor consumer confidence in a slowing economy – has hit sales volumes, portending hard times for India’s real estate sector.
Sale 25-30% Drop
Some brokers and market experts are bracing themselves for a 25-30% drop in transaction volumes in India’s top 6 cities urging the October-December busy season, which, if it happens, could trigger a competitive spiral of discounting to get rid of mounting inventories and restore depleted cash levels.
But builders are holding on to price levels while buyers, reluctant to book flats at current price levels and interest rates firmly in double digits, remain convinced that it’s only a matter of time before the penny drops. Which side will blink first is still not certain, even though some builders concede all is not hunky dory.
NAME OF CITIES | INVENTORY | SALES | ||
Oct – Dec,2009 | Oct – Dec, 2010 | Oct – Dec, 2009 | Oct – Dec, 2010 | |
Mumbai Metropolitan Region - MMR | 68.74 | 98.88 | 13.27 | 10.61 |
Pune | 36.18 | 36.14 | 12.48 | 9.66 |
Hyderabad | 54.56 | 47.78 | 6.60 | 5.07 |
National Capital Region - NCR | 103.39 | 170.51 | 23.11 | 20.03 |
Bangalore | 57.77 | 56.19 | 8.09 | 6.49 |
Chennai | 22.66 | 31.69 | 3.23 | 5.04 |
Total | 343.31 | 441.19S | 66.79 | 56.90 |
Source: Liases Foras Real Estate Rating & Research
With high inflation eating away at their earnings and financing costs high, buyers are looking for a significant correction in property prices rather than some festive season freebies.
Builders Accept Reality..!
According to Mr. Pankaj Kapoor, MD of Liases Foras Real Estate Rating & Research, “Builders need to accept reality. This acceptance will lead to price correction and revival in volume. The drop in sales volumes to steep property prices, rising interest rates and poor supply of so-called “affordable housing” projects.
Mr. Samarjit Singh of Agni Property, a property brokerage said, “Usually, during the festive season, prices firm up and there are new launches as well. But this season, both the inventory and prices of residential properties have remained static.
The National Capital Region (NCR) comprising the satellite towns of Noida, Gurgaon and Faridabad bordering Delhi, which turned in good sales numbers in the past two years, is facing supply constraints.
This is particularly true for Noida, which has seen a slew of regulatory actions prompted by farmers’ agitation over land acquisition.
Mr. Anil Kumar, chief executive, Ansal API said, “As far as sale of plotted land and mid-income housing is concerned, demand is intact in NCR and good sales traction is expected during this season. However, sales may take a hit wherever there are issues of land title.”
Source: http://www.myreality.in/2011/10/no-diwali-joys-for-indian-realtors.html
Source: http://www.myreality.in/2011/10/no-diwali-joys-for-indian-realtors.html
