Residential sales will take at least a year before they make a broad-based recovery, senior executives from top property development firms such as DLF, Godrej Properties and Embassy say.
Residential sales have seen a slowdown for the past five years and prices have stagnated due to poor demand. Property developers also faced severe liquidity crunch due to demonetisation, Real Estate (Regulation and Development) Act, 2016, crisis in non-banking financial companies and so on.
Recently, the government announced a Rs 25,000-crore fund for stalled projects, which is expected to help stuck projects in top seven cities.
“It is going to be worse before it gets better. It will take 6-12 months before it bottoms out,” said Pirojsha Godrej, chairman of Godrej Properties, adding: “The economy is going through a rough patch and until that starts showing some signs of recovery, the sector will not come out of the problems. You cannot delink the sector from the economy.”
On rescue financing, Godrej said not that all the issues would go out immediately, but the government has taken a good step. “There are a lot of customers who are suffering. It is important that the sector is brought back to life,” he said.
According to data analytics firm PropEquity, home sales have fallen 9.5 per cent on a yearly basis at 52,855 units across nine cities during July-September 2019.
“Demand has been definitely impacted in the last quarter, with buyers delaying their decisions,” Samir Jasuja, founder and managing director at PropEquity, said.
Rajiv Talwar, chief executive officer at DLF, the country’s largest developer, said it would take two to three quarters for any improvement in home sales. “Trust deficit is low now. I feel it will take two to three quarters for the tide to turn and for the buyer sentiment to improve,” he said. Talwar added that builders should take this (the fund) as a lifeline not bonanza.
Jitu Virwani, chairman at Bengaluru-based developer Embassy, said completed projects and those projects being constructed by big branded developers are selling well. “Big luxury flats are not selling, while those in the mid-segment are selling well. Developers are resizing the configuration of flats,” he said.
Godrej said prices were flattish for the past one year and will remain so for the next 12 months.