Unlike previous years, the delay in possession due to the demand-supply gap coupled with the distrust among homebuyers in NCR has dampened the Diwali spirit for the real estate market.
As things stand, the crunch in capital has forced real estate companies to delay construction, leading to apprehensions among prospective buyers. This, experts fear, might lead to one of the worst festive seasons for real estate companies in recent years.
“Last year on Diwali, I sold 16 flats, but this month I have just sold seven flats and all of them are on resale that are ready-to-move-in properties,” said Jinendra Jain, a property broker who operates in Sector 137, Noida.
The projects offering ready-to-move-in flats are selling inventory this season. Most of these flats were booked five to seven years ago. Builders say the basic two BHK segment is the only in-demand segment.
“By the end of 2016, more than 75,000 flats are likely to be delivered to homebuyers in Noida. About 20,000 in Gurgaon and 4,000 to 5,000 in Faridabad will be delivered by end of this year. Also, builders and homebuyers are eagerly waiting for the construction of the Metro line. This will boost the sale of flats,” said Sunny Katyal, director, Investors Clinic.
“Builders of nearly 50% of the projects launched in the last seven-eight years have given possession. The rest is likely to give possession by the end of this month or early next year,” said DC Sharma, chairman, Vedantam group, Noida.
Currently, there is a huge gap between the demand and supply of the flats. “The supply is surplus and the demand is low. It is leading to a dull festive season,” Sharma said.
Bestech, a Gurgaon-based builder, witnessed a slight spurt in sales of ready-to-move-in properties.
“We offered the buyers special payment plans and in some cases discounts and this worked. Although the market has not recovered but there was a positive response from buyers, which is a good signal,” said Kamaljeet Singh, vice president, marketing, Bestech group.
The liquidity crisis is preventing builders from investing and eventually leading to a fall in flats starting at Rs 50 lakh.
“The sale of two BHK flats in affordable housing segment has increased as compared to last Diwali. In Noida, Greater Noida west and Raj Nagar Extension areas of Ghaziabad, two BHKs are the most sold segment,” said Pankaj Goyal, secretary (NCR), confederation of real estate developers association of India (CREDAI).
Housing prices dipped in Gurgaon and Noida by 2% and 4%, respectively, according to online real estate portal PropTiger. The Real Estate (regulation and development) Act, 2016, which was passed by Parliament in March this year, has tightened the noose on builders who have delayed possessions. The builders are now mulling to hand over the possession of their flats before the bill comes to effect in the states.
Lesser investment from NRIs and luxury segment homebuyers of the metro cities have come as huge setback for builders. Sale of high-end flats has slumped to 50% as compared to last Diwali.
“The only way out from this slump is prompt possession of flats. As soon as the builders hand over the possession, the element of distrust will vanish,” said Sharma.
Gurgaon-based Emaar MGF, which offered possession of around 300 units recently, said they were able to sell property by offering a smart payment plan in projects along the Dwarka expressway. “The plan proposes initial payment of 25% within three months from the date of booking and the balance 75% is to be paid on possession,” said the company.
IN A NUTSHELL
Over three lakh units are under construction in Noida, Greater Noida, Ghaziabad and Gurgaon
45,000 flats likely to be handed over by the end of this year
Only 50% of the projects launched 7-8 years back have given possession
Large segment of buyers are eyeing on flats below R 50 lakh
Surplus supply and lesser demand is pulling the market back