Realtors offer new schemes to attract buyers in a slow market

‘Just two per cent is all you need to own a home’, says a billboard from a developer in this region. In Mumbai, developers are offering homes for a five per cent booking amount of the total cost. It is similar in other markets, with a slowdown having hit the realty sector.

“Rising inventory, coupled with funding issues of developers and low sales, has led to this situation. A revival is still 18-24 months away,” says a consultant in the National Capital Region (NCR).

Developers were earlier offering subvention schemes of 10 to 30 per cent booking, with the rest in instalments. Nothing was below 10 per cent.

HOUSING BLUES

• The number of launches of new home units for the quarter ended March 2015 was 24,700, compared with 55,500 in the same quarter of 2014
   
• Inventory levels at the end of December 2014 were 51 months for the NCR and 55 months for the Mumbai Metropolitan Region

Also, the number of launches of new home units in the January-March quarter was 24,700, as compared to 55,500 in the same quarter of 2014. In the major cities, only Hyderabad saw an increase in launch numbers (by 230 per cent over a year before at 3,300 units), according to a report by real estate consultancy firm Cushman & Wakefield.

Inventory levels at the end of December 2014 were 51 months for NCR and 55 months for the Mumbai Metropolitan Region, according to research firm Liases Foras. A healthy market maintains an eight-month inventory.

Sanjay Verma, Asia-Pacific head at Cushman & Wakefield, says interest from buyers should increase by the end of this year but "Floodgates will not open. Prices will remain stagnant or go up marginally in the next 12-18 months. Anyway, property prices are not the only reason for buyers to stay away from this market. Lack of confidence and execution in developers is a major factor.”

Ramesh Nair, international director at JLL India, says: "Mumbai’s residential developers have been offering various subvention schemes to entice fence-sitters. They're a good way for developers to raise money for construction."

Shveta Jain, executive director at Cushman & Wakefield, said: “The cost of creating new projects has been on a steady increase, as input costs have been rising. While the market sentiment is positive and enquiries have increased, conversion of interest to sale is low."

Also, many developers are taking time to restructure their debts. This is why there is an effort to keep debt exposure low by lowering the number of launches, except in high-demand locations.