Pune: The first half of the Financial Year (FY) 2017-18, has seen a huge drop in terms of launches and a significant drop in sales too, pointing towards the fact that the Real Estate sector fared poorly in H1 2017-18. According to developers, though the number of enquiries have gone up, the conversion time or the time required to make a buying decision has also gone up.
Developers blame the unstable economic conditions, lack of job creation and security as the primary reasons for this slowdown.
They believe that lack of job security has created a huge dip in the sales and then demonetisation and Goods and Services Tax (GST) have only added to the chaos.
CEO of VTP Realty, Sachin Bhandari said, “VTP Realty has performed really well in first half of 2017–2018. When we look at the performance of the company in the first half of this year, the company has seen a growth of 50% in terms of revenue.
However, the performance of the sector in first half of 2017-18 versus first half of 2016-17 has seen a huge drop. It is difficult to quote a specific percentage but it would be about 25 per cent as compared to last year. This is a clear indication that the developers are not coming up with new launches and are instead highly focused on liquidating their existing inventory, which would reduce the burden that they carry. There has been a 10 per cent drop in terms of sales in comparison to last fiscal year.”
According to Bhandari, lack of job creation and job security, unstable economic conditions, demonetisation, GST and lack of liquidity has affected the real estate sector in a negative way.
Meanwhile, Joint Managing Director of Kohinoor Group, Pune, Vineet Goyal said that the value of sales for the company have seen a drop of eight per cent in H1 2017-18. “We are a three-decade-old organization with presence in the Western part of Pune. Our sales of residential project have gone up in Hinjawadi whereas a slowdown is seen in our Talegaon project. The enquiries are coming consistently for the Hinjawadi projects and apartments are getting booked instantly. Ready to move in and closer to completion abodes are moving faster. The value of the sales is less by 8 per cent and our enquiries have increased by 12 per cent.”
He added that while the enquiries related to home buying have increased over the last year, the conversion time has also increased. “Last year on an average buyers used to take 60 days to make a buying decision. After a survey conducted by us, we found that the home buying decision time has swelled to 78 days for us this year. The home buying enquiries increasing is a good sign of the market predicting bullish trend,” Goyal explained.
According to Goyal, the two new reforms – Real Estate Regulatory Act (RERA) and GST have brought in transparent mechanism in the real estate market. “Apart from bringing in transparency and mechanism in the real estate sector, it has also created buyer’s dilemma and customers are still waiting for the doubts to be cleared. A number of potential buyers are sitting on the fence and waiting for things to be cleared. I am sure the year ahead will be buoyant with the enquiries turning into conversion and buyers and developers being very confident adapting to the policies. The sentiments in realty market are turning positive,” he added.
Looking forward, Bhandari said, “The government is very keen on promoting housing for all by 2022 and in order to support this, the government has come up with various benefits particularly in the affordable housing segment under the Pradhan Mantri Awas Yojna (PMAY), by giving good benefits to the lower income groups and the mid sector groups. The reduction stamp duty from 5% to Rs 1,000 has been a huge benefit to the customers. However it is necessary that the government should take more efforts in order to communicate with their customers regarding the benefits offered by them.
Speaking about the expectations in the next half of the financial year, the real estate market is liable to remain same, until and unless there is a drastic positive move by the government or a sudden downfall in the Indian/global scenario.”
Goyal added, “I am expecting fillip in the sales year ahead with multiple project launches and increase in buyer’s confidence. We will be going aggressive in mid-segment and affordable housing. I am expecting an increase of 25 per cent to 30 per cent in sales with the main focus on affordable housing under PMAY scheme .There was always a good demand for affordable housing in Pune but with regulatory and government support and increasing urbanisation, I am finding this segment to be beneficial both for customer and the developer.”