A Festive Season Briefing For Homebuyers..!
by Mr. Anuj Puri,
JLL India
As
we look at how the residential real estate market is behaving this
festive season, developers and the consultants are on the same page
while accepting that it continues
to go through a slow time.
Many developers still have their backs
against the wall financially, and have been challenged to complete or
show convincing progress on their under-construction projects.
Unfortunately,
fact this has been overly hyped by the media, and even developers who
are well capitalized and fully able to complete their projects have been
tarred by the
negativity brush. This has resulted in a drop in overall confidence
from buyers, who are worried that they will commit their money into
properties which will not be delivered on time.
Economic Signals..!
The
economy has not shown the kind of perk-up which everyone had hoped for.
However, matters have definitely improved over what we were seeing this
time last year. All in all,
the market’s outlook is improving.
The RBI’s recent interest rate cut
has helped improve sentiment, which is an important driver on the real
estate market.
With
this rate cut, the RBI sent an important signal to the market that
inflation is under control, and that it is confident about economic
growth. Such signals definitely
have a positive effect on buyer sentiment.
However, in terms of actual
pertinence on property purchase, the impact may not be very significant –
especially in expensive inner city areas in cities like Mumbai. If
property prices are in any case unaffordable,
a marginal reduction in the cost of borrowing will not make a
difference.
The reduction in interest rates will have a bigger impact on
buying behaviour in less expensive markets, such as peripheral
locations of the larger cities and tier 2 / tier 3 cities.
Pricing & Correction Outlook..!
In
the last four quarters, the prices in Mumbai increased by 3.7%, prices
in Chennai increased by 1.5% and no change recorded in the prices of
Delhi-NCR.
This presents a more
or less stable scenario, which is likely to continue for another two / or
three quarters. Though many fence-sitting buyers have been waiting for
real estate prices to correct, it is unlikely that any large-scale
‘shock disruption’ is imminent.
Corrections
are very location-specific as well as developer- specific, and will
happen where nothing else will work to encourage buyer activity. In
cities and locations where
there is still sufficient demand and prices are more or less
affordable, there will be no correction, while they will certainly
happen in areas where affordability is a deterrent to buyer sentiment.
However,
much is already happening to make real estate more affordable. Across
cities, developers have been actively re-configuring their projects to
align with market demand,
in the process saving on costs and passing on the benefit to buyers.
Also, a majority of the new housing project launches have been at lower
rates than those of earlier projects launched in the same locations in
such category projects.
NRI Investment Action
If
we take a step back from domestic real estate consumption and look at
demand coming from across our borders, the outlook looks very upbeat.
Currently, non-resident Indians
(NRIs) are extremely active in investing into Indian real estate.
In
fact, NRIs are among the top five investor communities in the country’s
property sector. Apart from their natural affinity to India and the fact
that NRIs see a higher intrinsic value on
Indian real estate over property owned elsewhere, purchase decisions
are also being spurred by the Indian rupee’s ongoing weakness against
the US dollar.
To Summarize..!
It
is at best a mixed bag of market readings this festive season – but is
it a good time to buy? Definitely, considering that buyers have never
been more spoiled for choice
– and, for that matter, bargaining power.
 |
| Anuj Puri, JLL India |
Also, we are seeing hard
discounts as well as offers to waive stamp duty and registration
charges, VAT, service tax and floor rise premium – all of which
translate into an actual saving on the cost of the property.
More than in many of the preceding years, this festive season is an
ideal time to zero in on the best deal and make that dream home a
reality.
About the author..
Mr. Anuj Puri is Chairman & Country Head at JLL India
For media contact
Mr. Arun Chitnis
Head – Corporate
Communications & Media Relations
JLL India
Pune 411001.
Tel: (020)
30930441 Fax: (020) 40196101
Mob: +91
9657129999
Twitter: @JLLIndia
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