Bangalore: Beset by falling sales, delivery delays and whittled liquidity this year, realtors are readying to launch a slew of projects in the festive season starting October, hoping that sentiment would turn buoyant and boost demand for homes.
“Despite low sentiments, we are hoping that people will be in a mood to buy,” said Pujit Agarwal, managing director of Mumbai-based Orbit Corp Ltd. “Developers have been trying hard to offload existing stock in the past few months, postponing all launches till Diwali.”
Orbit is gearing up for an October launch of a gated beachfront property in Alibaug, a holiday destination on the coast close to Mumbai. The luxury project, which has US-based Turner Construction Co. as consultant, will cost between Rs2.5 crore and Rs20 crore for a villa.
Many developers—who have not offered new projects due to the real estate downturn that started this year—have lined up residential projects for launch in the next one month.
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Analysts estimate home sales in the National Capital Region alone have slumped in the last six months by at least 30-40% and launches have been few.
Although bigger firms such as Unitech Ltd, India’s second biggest real estate developer, have been launching projects at regular intervals, mid-sized companies have burnt their fingers whenever they have launched projects this year.
Mayfair Housing Pvt. Ltd, a Mumbai-based developer that generally sells economically priced apartments in the city, managed to sell only one of the six apartments in a premium project in Juhu, launched in April. The company is now launching projects in the mid-price segment, hoping it will attract more sales this time round.
In Mumbai and Thane, most developers are launching projects in the suburbs and have priced homes starting at Rs4,500 per sq. ft—nearly the same price at which such homes were offered a year ago.
Smaller developers in metro cities have also played safe this year, keeping away from any launch fearing low conversion rates—the actual translation from enquiries to sales. For instance, Lodha Group is launching five housing projects in Mumbai after its last launch in March.
Prajapati Constructions Ltd, a Navi Mumbai-based developer, launched its last project in 2007 and now has a launch coming up in Hyderabad.
“We sold only five flats in Mumbai in September and are trying to sell off what we have built before launching any more,” said managing director Rajesh Prajapati.
Developers also say the focus of all these new projects—after a long time—will be the homebuyer. “There are no investors in the market, builders are not in a state to buy land or announce IPOs (initial public offerings),” said Nainesh Shah, executive director of Everest Developers Ltd, which is launching the fourth phase of Everest World, a residential complex in Mumbai. “Only homebuyers can bail them out in such a situation, which is why every builder will concentrate on product positioning, and those with serious funds crunch will offer more discounts.”
Unmesh Sharma, an analyst with advisory Macquarie Research said pricing will play a key role in how these new projects fare in the upcoming festive season. “With a lot of supply coming in at one go, builders would be careful about how they price their product and many of them would try giving out more freebies and maybe, discounts to attract buyers,” he said. “Ideally, they should launch projects in the mid-segment, at lower prices.”
Orbit’s Agarwal also said some developers, particularly those who bought land at astronomical rates, would be forced to launch projects because “holding on to land would only mean piling up interest costs.”