Festive season records a spike in Property Sales
Traditionally, property sales see an upsurge during the festive season, which commences from October and lasts till February-March, almost till the time of Holi. With Diwali heralding the beginning of the festivities, realtors believe this is the best time to woo buyers, as making new investments and purchases during this period is considered auspicious. After all, most Indians tend to link property acquisition with auspicious dates. And there is no better time than the festival period to turn sentiments conducive to making big ticket buying decisions.
It has been observed that activity levels in the property market increase substantially during this period. This year, the industry is hoping to close sales of at least 60,000 units across seven major cities, almost double of that recorded in the past two years. Average annual sales for the sector are expected to reach 200,000 units, with a good festival season contributing 30-40 per cent to the total.
Industry sources say that between 2012 and Q2 2014, around 4, 81,000 units were launched in top eight Indian cities; Delhi-NCR, Bengaluru and Mumbai accounted for 27 per cent, 25 and 15 per cent respectively. The nascent revival in market conditions since the formation of the new government at the centre is making the industry look forward to liquidating substantial real estate inventory.
Playing on this positive sentiment, developers are pulling out all stops to woo customers into buying homes by offering special discounts and promotional offers. Some are offering lucky draws, discounts and pre-launch offers, scratch cards that could win buyers a foreign trip, a car, club membership or mobile phones. A few others have conjured up ingenious offers like a no EMI clause until possession. Besides, there are inaugural discounts for bookings, easy-payment options, stamp duty waiver, cash discounts and assured returns plans that many buyers would find appealing.
While these special offers and freebies help developers to tap potential customers, they also serve to unload the unsold inventory before fresh launches can be made. As many as 100 new projects will be launched during this festival season in the top eight Indian cities, but most of these markets continue to be also saddled with high levels of unsold stock. Data by a real estate research firm shows that the Mumbai Metropolitan Region had an inventory of 53 months at the end of June 2014, while the NCR had an inventory of 45 months. Among other top Indian cities, Hyderabad had an inventory of 47 months, Pune 23 months and Chennai 26 months. Bangalore had the smallest inventory among major cities, of 19 months. An ideal market maintains an inventory of eight months.
Offering aggressive discounts and enticing promotional offers can help developers to liquidate their existing stocks swiftly. However, though festive discounts on property sales are known to speed up the decision making process of a customer, they are unlikely to affect his/ her choice of developer and project. This is so because while a customer may base his/ her decision for buying low value consumer durables based on festive discounts and offers, it is unlikely when it comes to a high involvement product such as buying a house. Factors like credibility of the developer, location of the project, amenities provided, construction specifications become the key drivers for property selection.
Given the fact that there exists plenty of end-user demand in the real estate industry, buyers would surely be more than willing to snap up products that offer good value for money and meet their expectations. Any additional discounts or offers along the way are bound to sweeten the deal further and will help to draw out more customers waiting in the wings. With the momentum in the business cycle picking up visibly over the past couple of months, let’s hope that this festive season packs a real wallop for the real estate sector.
P Sahel, Vice Chairman, Lotus Greens Developers Private Limited
The views expressed in this article are author´s own.
