Festive mood: Realtors expect 25-30% jump in sales this season
The fear of a third Covid wave notwithstanding, real estate developers expect a 25 to 30 per cent jump in residential sales during the festive season. The reason being continued momentum in sales in the last couple of months due to stamp duty cuts in some states, lower interest rates, discounts and offers, demand for larger homes to accommodate work from home and so on.
Last year's festive season was not great for property developers as the pandemic hit residential sales.
Mohit Malhotra, managing director and CEO at Godrej Properties, said the overall sentiment is quite positive. “Historically, this period has given us a good build-up for ending the year on a good note. There are project-level value propositions we keep going to market with, depending on the geographic nuances,” Malhotra said.
Though sales booking fell 68 per cent in Q1FY22 due to the second wave of the pandemic, the company expects strong sales momentum in the remainder of the financial year, chairman Pirojsha Godrej said in a recent release.
Sanjay Dutt, managing director of Tata Realty & Infrastructure, added, “We expect the demand to exceed by overall 25-30 per cent versus first and second quarter.” He said that promotions in print, digital and electronic media, attractive prices, payment plan, white goods, stamp duty waivers and so on will give the required lift.
"We expect a continued improvement in key markets like Mumbai and a strong revival across the country in line with the economic recovery,” added Kamal Khetan, chairman and managing director, Mumbai based Sunteck Realty. “We have seen a steady rise in demand over the past few months.” Khetan expects a new sales growth of 25 to 30 per cent in the festive period.
Over the last few quarters, they have observed an increasing demand for residential properties in the market, especially within the luxury and ultra-luxury segments, said Ashish R Puravankara, managing director, Bengaluru-based Puravankara. “There is a latent demand, which is presenting itself strongly, encouraged by positive sentiments,” he said. “We closed FY21 at a record high of ~2,200 crore of sales; this validates that there is a pent-up demand.”
Sharad Mittal, director and CEO at fund management firm Motilal Oswal Real Estate, said given that sales in Mumbai and Pune were spurred during the festive season last year because of temporary stamp duty cut by the Maharashtra government, one could expect similar kind of sales momentum this festive season, too. The reason this time, he said, would be pent-up demand because of the second wave of the pandemic.
Home sales grew 67 per cent in the first half of 2021 due to growth in markets like Pune and Mumbai compared to the same period in 2020 due to a cut in stamp duty, said a report by Knight Frank.
The Maharashtra government reduced stamp duty rates for property transactions to two per cent till December 31, 2020 and to three per cent till March 31, 2021 which led to a spike in residential sales in the state. Karnataka also cut stamp duty rates.
“After a dismal demand for over five consecutive festive seasons, this time around the improved sentiments would only add to the pent-up demand of over half a decade to see a pronounced bounce back in the transaction volumes,” Gulam Zia, executive director, Knight Frank said.
Zia, however, expects a slightly lower uptick in sales, at 15 to 20 per cent, during the festive season. His explanation is that after a long recessionary period resulting in huge price corrections, developers have little cushion left to offer price cuts. “Branded and A-grade developers are firmly sticking to their prices and, in fact, in a few instances there’s even a visible upward pressure on prices,” he said, adding, “The distress continues to be felt in the rest of the developers and buyers can press for price reductions in such projects.”
He, however, added that freebies and stamp duty cuts are prevalent across categories, at least for this festive season.
Third wave challenge
Most developers are confident that the pandemic will not pose a fresh challenge to residential sales during the festive season, the way it did last year. “Given the higher vaccination levels and enhanced learning from the second wave, we expect a lesser impact in terms of disruption to economic activities in general,” said Khetan of Sunteck.
Puravankara added that they believe the buoyant customer sentiment and nationwide vaccination efforts will be integral in sustaining the momentum within the real estate sector in the upcoming quarters. “While it is not feasible to predict the scale of the impact of a potential third wave right now, we believe that the lessons from the first and second waves will allow us to be better prepared for any contingencies that may arise in the future,” he said.