Diwali, the festival of lights, seems to have failed to enlighten the fortunes of real estate companies.
Industry experts said the year-ahead outlook looked grim with demand expected to fall by 30-40%. Besides, a correction in prices looked unlikely.
“In Mumbai, the National Capital Region (NCR), Bangalore and Chennai, the demand is expected be down by 30-40% against the last two years,” said Thirumal Govindraj, executive director at the international real estate consultancy firm Global Corporate Services India, CBRE.
India’s real estate sector has seen a spurt in sales between October and December every year for some time now. Almost 50% of the sales are closed during the last five months. However, this year, buyers are likely to stay away, said experts.
“Buyers are going to delay the purchase by about six months due to the Reserve Bank of India’s stance on interest hikes,” said Niranjan Hiranandani, head, Hiranandani Group. “The most impacted are the people who want to purchase an affordable house, it is impossible for them to buy one as interest rates are very high.”
While prices in Mumbai and the NCR peaked, sales volumes have been falling in the last six months. Bangalore has stabilised, but demand has been lukewarm in past five months. Chennai, on the other hand, continues to stagnate said analysts.
The number of projects launched during the festive season has also seen a huge fall. According to industry estimates, there has been a 50% drop in the number of launches of residential projects in Mumbai, the NCR, Bangalore and Chennai this year.