Green shoots in real estate: Conversion rates go up

Even as the Indian economy grapples with the pandemic-induced lockdowns, top realtors claim they are now witnessing green shoots in the sector. According to them, conversion rates — from enquiries to sales — have risen to 20-25 per cent, from the single-digit levels of pre-covid days. The average unit sizes of sales have also gone up.

Residential property sales dropped 81 per cent in the top Indian cities in the April to June quarter of this year. New launches, too, declined 98 per cent. But big brands are now gaining from the pent-up demand of the last three months.

Mumbai-based

Oberoi Realty has seen a conversion rate of about 25 per cent, compared to

10 per cent earlier, said Vikas Oberoi, the company’s chairman. “We have seen

V-shaped recovery in residential demand in July and more in August. Despite

Covid, more than

1,000 people visited our various show flats. We also see customers wanting a good brand, quality, assurance, and they’re not so fussy about the price,” said Oberoi.

Oberoi Realty’s profit before tax fell

81.6 per cent in the

June quarter of

2020-21.

A recent report by Anarock

Property

Consultants said the highest demand in the Mumbai Metropolitan Region was for properties priced between ~60 lakh and ~1.2 crore, which were of 400-800 square (sq.) feet (ft) carpet area. Buyers aged 30-35 years, currently living on rent, had the highest purchase inclination, it said.

The demand from non-resident Indians and the easy availability of finance schemes have also improved sales, said developers.

For instance Bengaluru-based Brigade Enterprises, the conversion ratio has gone up 20 per cent after the pandemic and the average unit size has increased nearly 15 per cent in its overall sales portfolio.

The contribution of completed inventory has increased nearly 50 per cent in overall sales, said Rajendra Joshi, chief executive officer, residential, Brigade Enterprises.

“Non-resident Indian customers contributed to a quarter of our sales between April and June. Their contribution used to be around 12 per cent prior to Covid,” said Joshi. While June and July sales were at 60 per cent of pre-covid levels, August sales are almost touching pre-covid levels, he added. “We will hopefully recover fully by Diwali, if not earlier,” said Joshi.

In Bengaluru, enquiries for larger homes have increased to 40 per cent, with property seekers predominantly scouting for three-bedroom apartments (with an average size of 1,800 sq. ft), against the previously-preferred two-bed ones, said Anarock. Murali Malayappan, chairman at Bengaluru-based Shriram Properties, said their earlier conversion rates of 2-3 per cent of total site visits had now gone up to over 15 per cent. For Salarpuria Sattva, another Bengaluru-based real estate developer, the conversion ratio has increased to three times of what it was before Covid-19 hit the country, as there are now more serious buyers looking for quality construction. “An added advantage for buyers are the schemes such as ‘pay only 25 per cent now and balance

after 12 months’ and flexi payment options. These help buyers make quick decisions,” said Adrija Agarwal, strategy advisor, Salarpuria Sattva. Others narrate the same story. Mumbai’s Lodha Developers saw a 20 per cent increase in conversion during this quarter. It garnered 700 bookings in August and did business worth ~617 crore.

And over July-august, it chalked up business worth ~1,175 crore, which is almost close to the business it did in January-february, said Prashant Bindal, the company’s chief sales officer. Kamal Khetan, chairman of Mumbai-based Sunteck Realty, said there was now a substantial demand for ready homes.