by Mr. Anuj Puri, JLL India
The
Indian real estate market is definitely in recovery mode again. However, at
this point in time, it is more than evident that the festive season was not
able to fully harness the benefits of market recovery. This is because the
events that have catalysed the recovery – namely the new government at the
centre, its pro-business policies, the encouraging Union Budget and the
provisions it has announced favouring real estate – will need more time to
bring their benefits to bear on the market.
Likewise,
the RBI has held on to current interest rates in favour of safeguarding against
further inflationary trends. It will take several more months for the market to
get into convincing forward momentum again, so the festive season did not bring
the kind of momentum that was hoped for.
While
demand exists, it is still held in abeyance by various economic factors,
including the natural lag between the announcement and implementation of
government policy catalysts. Reduced pricing could potentially induce some
further sales momentum in certain pockets, but it is not likely to happen as
developers are not keen on signalling a correction, especially when demand is
waiting in the wings. New projects are in any case being announced at lower
rates.
Developers
have been addressing the situation by offering selective discounts and
incentives, the success of which has varied across cities and locations. Those
with greater holding power continue to wait for the market to pick up so that
sales velocity will accelerate.
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| Anuj Puri, JLL India |
With
reference to the high levels of unsold inventory, launches have decreased
consistently since 1Q13, with exception of 1Q14, in which launches increased.
This has resulted in unsold inventory further increasing by 6.7% in the same
period because of sluggish sales. It is only after four consecutive quarters of
slow launches, activities such as reconfiguration of units, reduction of total
ticket price, etc. induced some improvement in sales at the country level.
Prior
to the general elections, developers had launched many projects to gain a
competitive advantage, and in anticipation of a recovery in market conditions
after the polls. However, the launches did not really pick up post elections,
as residential property buyers continued to remain cautious. This is actually
positive, because in a healthy market environment, supply needs to take its
cues from on-ground demand.
In
short, sales velocity during this festive season have remained uninspiring
despite the various attractive pricing schemes and discounts that developers
have been offering to attract buyers. However, the current scenario is no way
indicative of what lies ahead for the real estate market, for which the outlook
remains very much positive.
To
my reckoning, we are currently at the cusp of growth, and the tangible
manifestations of the current market recovery will become visible over the next
twelve months. The old dictum ‘what cooks slowly cooks well’ is very pertinent
in the present scenario.
About
the author
Mr.
Anuj Puri is Chairman & Country Head, at JLL India
For
more details
Arun
Chitnis
Head
– Corporate Communications & Media Relations
JLL
India
Pune
411001.
Tel:
(020) 30930441 Fax: (020) 40196101
Mob:
+91 9657129999
Twitter:
JLLIndia_Realty
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