Buyers prefer resale properties to new projects
Real estate market in India is currently being driven by buyers than investors. Since the sector is largely being affected by project delays, homebuyers have been making a shift from new projects to secondary market.
Investors stay still due to uncertain market conditions
Rising inventory levels and decreased sales volumes may give rise to a suspicion that the property market has no buyers left. But it is not the fact. It is the investors who have remained still as they do not want to block their investments for years together to stagnate. They are currently in a ‘wait and watch mode’ as they do not want to take risk by investing in projects which may have to stay idle for years, as an effect of market slowdown.
Slowdown tends to change buyers’ priority
Though, the prevailing market scenario has not stopped buyers from buying properties, it has surely made a shift in their choice. Many buyers prefer to buy properties in secondary market or ready-to-move-in properties or those which are nearing completion. The buyers prefer to make a quick move than getting into prolonged waiting periods. This has certainly affected the market dynamics, since new launches have been facing the heat of shortage of buyers.
As project delays are becoming quite common in the recent times, the end users are afraid to invest in new projects.
Project delays highest in NCR
In Delhi-NCR, only 21,371 residential units had been delivered until July this year, out of the promised 91,558 residential units. This shows that there is only 23 percent delivery rate, which is hardly impressive.
Drop in new launches
As the developers seem to be reluctant to address the concerns of the end-users, many potential buyers have been departing from the market. This has brought down a significant fall in the number of new project launches. Delhi-NCR witnessed around 8 percent decrease in the launches in the first half of 2013, says property consultant Cushman & Wakefield. According to CREDAI, new launches have declined by almost 40 percent during January to September 2013.
The decline in the number of new launches was steeper in the high-end and luxury segment with around 70 percent fall in the H1 of 2013 against H1 of 2012. In the first half of 2013, there were almost no new launches in the luxury segment.
Secondary market gains prominence
Owing to delays in property market, the resale properties have started attracting the end-users. In addition, it is marked that there has been a price correction in the resale realty market across various cities. The price difference is minimal if the project is close to completion. Even the investors who want to quickly exit from the market are ready to offer the properties they had earlier bought at lower prices. With these reasons, the end-users are now able to find good deals in the secondary market.
Moreover, since new project launches have dropped highly, the end-users are failing to find the properties of their choice in the new projects. This is another factor driving sales in resale segment.
