Realtors sense revival as enquiries rise, prices stable
Sep 03 2014 , Mumbai
Coming after a lull of almost two years, this would be music to the ears of a host of other industries too, like steel and cement, whose fortunes swing with the ebbs and flow of the real estate sector. The economy grew 5.7 per cent in the June quarter compared with a year earlier, thanks to a rebound in industrial activity.
Residential property sales have remained sluggish over the past two years amid slowing economic growth, high interest rates and high inflation. But a decisive election verdict, sops for the housing sector in the Union budget and optimism about economic recovery seem to have changed buyers’ sentiment over the past three months.
Industry watchers say the revival has been miniscule at the moment, but expected to bounce strongly in the second half of this financial year. Demand has been improving in the last couple of months, albeit a slow pace, which has helped keep property prices largely stable in most locations, barring a few, they said.
Knight Frank has projected sales to grow 26 per cent in the top six metros during the second half of 2014 compared with the year-ago period. Mumbai and Bangalore are expected to lead this sales recovery with 49 per cent and 26 per cent growth, respectively, the independent real estate consultancy said in a report this past weekend.
Sales volumes crashed 27 per cent in these cities during January-June.
“The market is improving, there has been an increase in enquiry levels and more enquiries are translating into sales. Even our high-end projects are seeing some recovery,” Rajeev Talwar, executive director of DLF told Financial Chronicle.
He said prices were stable across the country at the moment and should remain at these levels for sometime, barring a few locations and projects, which may be seeing high demand. “Stable prices would help demand recovery,” Talwar said.
Liases Foras, a Mumbai-based non-brokerage real estate research firm, said property sale negotiations were still skewed towards buyers, particularly in the Delhi-NCR region. “Many developers are offering sops like registration fee waiver to draw buyers,” said Pankaj Kapoor, chief executive officer.
Sunil Mantri, chairman of Mantri Realty, said the signs of recovery were all over, and things should improve fast from next month with the advent of the festive season.
The Knight Frank report showed an 11 per cent jump in residential property prices during January to June in Bangalore, the highest appreciation among all cities, while Hyderabad clocked a 9 per cent rise. The report projected Mumbai to lead in price appreciation in the second half of the year, with at least 10 per cent rise year-on-year.
Boman R Irani, chairman and managing director of Mumbai-based realty developer Rustomjee, said: “After a long lull in demand, finally there are signs of recovery. The situation has improved slightly in the last two months; August was better than July and July had been better than June. Earlier if it was 100 customers a month, it is around 250 to 300 now. We expect more of these enquiries to translate into actual demand.”
Irani said a bullish stock market was helping sentiment, which should get a further boost during the forthcoming festival season.
About 83 per cent of all new launches in Pune were below the ticket size of Rs 50 lakh during January-June, making the city most affordable among the six. In Chennai, 75 per cent of the new launches were below the ticket size of Rs 50 lakh, and in Delhi-NCR 62 per cent, the Knight Frank report said. Mumbai emerged the most premium market, with 34 per cent of the new launches coming above the ticket size of Rs 1 crore.
Samantak Das, chief economist and director of research at Knight Frank, said improved consumer sentiment helped increase enquiries. “The optimism is slowly translating into reality, which will help translate enquiries into demand,” Das said.
Delhi-NCR is expected to see a 2 per cent increase in the weighted average price in the second half of the year to Rs 4,500 per sq ft, but a 25,000-plus residential property auction by the Delhi Development Authority might slow down the demand revival.