"Save lakhs by buying a pre-launch flat…excellent location, reputed builder, metro connectivity"... "Holi offer: Plot in just Rs 12 lakh before Holi, rate revising soon"... "Last chance to grab personal suites, pay 15 per cent now, no EMI till 18 months"... "Most awaited project launching at Rs 6,550 per sq ft, next rate Rs 7,550 after this week, book profit". These are among the hundreds of promotional messages which have flooded the inbox of mobile phones over the past few months, more so since the beginning of 2013, after a longish lull. But even as developers are on a spree to launch residential projects, it may not mean the end of trouble for the sector. While analysts are still crunching numbers on launches this year, estimates suggest the first three months saw record growth in new realty projects including from the big builders in investor-driven markets of Delhi and Mumbai. There are 492 new residential projects on offer in Mumbai and surrounding areas, of which 122 are ready to move in, according to property listing website 99acres.com. In Delhi, there are 539 new projects, Bangalore 536, Chennai 387, Kolkata 212, Pune 331, Ahmedabad 124 and Hyderabad 352. Ready-to-move-in house numbers are low across cities at 19 in Delhi, 46 in Bangalore, 43 in Chennai, 7 in Kolkata, 23 in Pune, 11 in Ahmedabad and 36 in Hyderabad. DLF, Emaar MGF, Wave Infratech, Godrej Properties, Tata Housing, Lodha group, Paradise, Amrapali and Prestige are among the long list of developers to have launched projects in these markets in the last few months. Another leading developer, Unitech, is expected to launch a project soon. Bigger players and high-end launches have dominated the market this year as against smaller companies (who lack marketing muscle) announcing most of the projects last year, according to industry experts. (RISING HIGH) Sanjay Sharma, managing director, Qubrex, a real estate research and brokerage firm, says the scenario now is quite similar to 2008-09 when the economic slowdown had started. As at that time, new projects have picked up pace, though, ready-to-move-in is slowing down. But, while in 2008-09 realtors leaned towards affordable housing in a big way by cutting size to lower the ticket price, and delayed high-end launches to increase the stickiness for investors, now developers are continuing with the premium and luxury projects despite a slow secondary market, according to Sharma. The lure of less However, even as the ticket price for residential real estate projects has remained high, the upfront money to be paid by the buyer is rather low. A broker cited the low "floor price', referring to the booking amount, as a definite attraction in the market these days. When it comes to payment, a 20-80 model is the buzz where the buyer pays 20 per cent or less initially as advance and the remaining money is paid only when the flat is ready. According to Jigar Shah, head of research, Kim Eng Securities, a leading Asian brokerage, investors will chase what gives them best returns. While a lot of real estate investment is need-based in India, Shah talks of new projects launched by several companies in the past 18 months and the concept of pre-buying of residential units that have made it an investors' market more than ever before. The concept of builders keeping property prices on hold till demand is established through pre-launch offers is also picking up, keeping the primary realty market hot.
While the Lodha group tried the IPO-allotment like strategy to allot flats in Mumbai, Tata Housing opted for a lottery system to sell houses at Dwarka Expressway, that joins Gurgaon and Delhi. Godrej Properties chose the first-come, first-served route for a Gurgaon project recently, and as the number of applicants far exceeded the number of flats, the final price was fixed at Rs 5,500 per sq ft, against market expectation of Rs 4,500 per sq ft. However, despite the buzz around launches, there's a definite sign of slowdown. A leading developer is learnt to be offering inaugural discounts even weeks after the launch, a broker says without naming the company. Usually, this builder sells within hours of the launch of a project, he adds. After a challenging year for the real estate sector largely due to economic factors and mispriced projects, by the end of 2012, a general confidence in the economy was gaining ground with the realisation that projects would only be successful if they were launched at lucrative prices, says Samir Jasuja, founder and chief executive, PropEquity, a real estate consultancy. "That's been the basis for majority of the launches in 2013," Jasuja adds. But Jasuja agrees that the luxury segment has been the focus for some developers both due to its better project margins and demand. "This segment has generally done well in prime micro-markets where land availability is low and if the developer's profile and specifications of the project are good." Harinder Singh, managing director, Realistic Realtors, a brokerage firm, attributes the large number of launches to developers getting more licences for projects this year. Many say the spike in launches could also be a strategy by the cash-starved developers to raise fresh money. Industry experts agree some percentage of developers may be up to that, using the fresh money to clear their backlog, but it is not true for the industry overall. An executive of a leading real estate firm says the market has started opening up with the softening of interest rates. "Developers want to encash on this demand from consumers, which is why more projects were launched this year." Buyer's market Should you be investing in a house then? Singh of Realistic Realtors says, "It is a good time to buy property." "The market has potential and we could even achieve 20-25 per cent growth this year," he adds. Also, developers are now launching products which are more aligned to the current market conditions, according to experts. "Before 2009, developers seized every opportunity and launched hotels, SEZs and other retail ventures. Subsequently, they had no cash flow and again moved towards residential segment to generate cash flow," Sanjay Dutt, executive managing director(South Asia), Cushman and Wakefield, says. "Overall, big players who were earlier over-exposed are now getting their act together and moving in the right direction," Dutt says. DLF, perhaps, is a case in point. Among others, the country's largest realtor has been trying to reduce its mounting debt and has somewhat succeeded in doing so by selling its non-core assets. From a peak of Rs 23,000 crore, its debt is down to Rs 18,000 crore, and is expected to reduce to Rs 15,000 crore over the coming months. The year is likely to be good for not just those who are scouting for new houses but also for those awaiting deliveries. It is expected to see one of the largest handing over of projects with about 517,365 units in 15 cities, according to data from PropEquity. This committed supply is even higher than the actual deliveries for the preceding two years from these cities. In 2012, about 291,000 homes were delivered, against 172,000 in 2011. However, not everyone is so optimistic of the future and some say handing over of nearly half of these homes would be delayed. Sounding a cautionary note, Anshuman Magazine, chairman and managing director, CBRE, South Asia, says, "Moving market is a good sign, but the overall sentiment is still very low." Also, banks came to the rescue of the real estate sector indirectly in 2008-09 by giving loans to the buyers who in turn passed it on to the builders, points out Sharma of Qubrex. "This time around if things go wrong in the primary realty market, it would be beyond repair."