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 Rs 60 lakh and Rs 1.2 crore, that were of 400-800 square (sq.) feet (ft) carpet area. Buyers aged between 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, for 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.
“We can’t compare the pre-Covid sales with the sales during Covid times, as customers couldn’t visit the sites due to the lockdown and other restrictions. Yet we clearly see an increase in the site visit conversion rate now,” said Malayappan.
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 various 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 Rs 617 crore.
And over July-August, it chalked up business worth Rs 1,175 crore, which is almost close to the business it did in January-February, said Prashant Bindal, the company’s chief sales officer.
“With the pandemic reinstating the desire for home ownership, there has been an influx in the business in the past two months, and sales are reaching pre-Covid levels. Considering the changing times, buyers are looking for immediate occupancy, leading to the maximum demand for ready-to-move-in homes,” said Bindal.
He said there was also greater interest in extra space, with consumers of one-bedroom apartments graduating to one and a half bedroom apartments and two-bedroom apartment seekers moving up to two and a half bedroom apartments.
Kamal Khetan, chairman of Mumbai-based Sunteck Realty, also said there is now a substantial demand for ready homes. Sunteck Realty’s conversion rates have gone up 10-20 per cent, depending on the categories, he said.