Builders Go Slow on New Projects as Sales are Slide Down

 

Bhiwadi - 10th May 2015

The number of new units launched in the quarter ended March declined 57% from a year ago to 43,328 across top nine property markets of the country, including Mumbai, Delhi-NCR, Bengaluru and Pune, reflecting the weak sales sentiment and little interest from consumers despite the various incentives that were on offer. The only exceptions were Gurgaon and Hyderabad, that registered an increase of 174% and 129%, respectively, according to a report by News Corp-backed property portal PropTiger.com.

Projects Sales are Slide Down

"Sales continue to be sluggish and weak response from consumers has resulted in lower number of launches by developers," said Dhruv Agarwala, CEO and co-founder, PropTiger.com. "But demand for housing is likely to improve in the next two quarters due to the recent home loan rate cuts and expected salary increments."

While realty developers affirm that sales have been sluggish, they are keeping their fingers crossed on a turnaround. "Sales traction has started to pick up. Although it's (sales momentum) not as much as developers would like them to be, inquiries have improved, particularly after the rate cuts. We are going ahead with around five launches in the next four months in Mumbai and Pune," said Sunny Bijlani, director, Supreme Universal, adding that the company is fairly confident about the response to these projects spread over nearly 2 million sq ft.

Property brokers are also pinning their hopes on rate cuts. "For some time now, not many residential deals are getting concluded despite several schemes and incentives being offered. With home loan rate reduction and salary increments, enquiries have started to move up, let's see how it goes from here," said Rajiv Jain of a property broking firm Ruchika Sheltor.

"After a long time, developers have reduced their base prices too by around 10% (in some prime pockets of Mumbai) to attract consumers."

For the past couple of quarters, developers have been trying to push sales through several incentives and schemes, including interest subvention and deferred payment plan than any direct reduction in property prices.

Realty developers have been launching affordable housing projects since the past two years in anticipation of a sales revival. But they didn't get good response since the projects are located at far flung areas without much connectivity, which have also added to the inventory pile-up.

"Affordable segment that was expected to see robust demand hasn't done that well. Launches aimed at capturing this demand have rather inflated the inventory levels," Agarwala explained.

According to Agarwala, affordable projects with prices of even less that 3,000 per sq ft at locations with low connectivity and infrastructure such as Bhiwadi , Manesar and Yamuna Expressway in the National Capital Region and Attibele, Chandapura, Sarjapur village near Bengaluru are not finding good consumer response.

 

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