Developers hope for improved sales this festive season, but analysts are not biting
Ashok Shaw 14 September 2010

Developers are waiting for the period from 24th September to 7th October (considered inauspicious for property purchase) to be over for markets to pick up; but analysts do not expect many add-on incentives for consumers after this period

As always, developers are hoping for improved performance in real-estate sales this Diwali. However, real-estate analysts say that the nascent economic revival might not be enough to boost purchasing sentiments, even with the onset of the Hindu festival season.

Ashutosh Limaye, associate director, strategic consulting, Jones Lang LaSelle, a real-estate services firm, writes in his company's blog, "I think it's a fairly safe bet that we are not going to see any exuberant tradition-fuelled spiking of transactions this year. While the festival season is likely to bring a certain degree of temporary effervescence in residential sales, one cannot read too much into this in market terms."

Though one usually sees a spurt in transactions on festive days, it is because buyers defer their purchase till such days which are considered auspicious days (for Hindus) based on astrological calculations. 

Sunil Bajaj, a real-estate consultant, told Moneylife, "Property is rarely bought on impulse and it cannot be compared to buying a television, stereo, mobile or even a car. The prospective buyer first shortlists and selects a house according to his choice; puts it on hold with the developer and finalises the deal on such festive occasions which are considered auspicious moments for property and other capital purchases."

But developers maintain that they expect to see an increase in sales this coming Diwali.

Vivek Lulla, marketing executive, Triveni Group, a real-estate developer with a focus on the National Capital Region (NCR) said, "We are experiencing low sales during (the) Ganapati (season, from 10th September to 22nd September). But after 7th October, we expect the market to go up. By Diwali, we are expecting a good outcome."

Rajendra Sharma, a Mumbai-based real-estate broker, said that during festival times, sales go up by 15% to 20% and expects the same this time too. But property prices are at an all-time high; it remains to be seen if buyers will go in for purchases even during the festive season.

Triveni Group claims that it has achieved its targets over the past two months, and has subsequently jacked up prices during the period that's deemed inauspicious for property purchase. "That's one of the reasons why we have recorded low sales. But we are not worried. We expect good sales during Navaratri and Diwali," Mr Lulla said.

However, he refused to comment on whether Triveni would offer any discounts this festive season, stating that Diwali is still "far away". Another developer, Mumbai-based Aditya Associates, said that it is also looking at high sales during Diwali. But this developer will offer discounts depending on market conditions.

But, according to Mr Limaye, the add-on incentives that developers usually offer during the festive period will not be much in evidence. "They (developers) are aware that their customers are focused on true value, and that it is location, pricing and appreciation potential that are now the primary criteria for Indian residential property buyers," says Mr Limaye.

Though analysts don't expect much leverage from developers, financial institutions such as Allahabad Bank are offering borrowers an interest concession of up to 1% on home loans during the festival period.

But analysts say this new offering from Allahabad Bank won't create an industry-wide trend as this bank is not a big player in the home-loan market. On the other hand, big lenders (both in the public and private sectors) such as State Bank of India (SBI) and ICICI Bank have hiked lending rates, Mr Bajaj said.

So will this festive season bring about some cheer for the residential real-estate segment? Or will developers have no other option but to pray that the customers come in, considering the astronomical prices of properties across India and tighter lending norms from financial institutions?

1 decade ago
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