The economic meltdown post the COVID-19 outbreak has instilled fear among prospective homebuyers in Navi Mumbai. Therefore, despite the under-construction segment witnessing some transactions in Jul-Sep 2020, big-ticket size investments remained understated, reports 99acres Mumbai Insite.
The COVID-19 pandemic has taken a massive toll on the Indian economy. The nation that was already grappling with slow Gross Domestic Product (GDP) growth has further suffered a hit post the Coronavirus outbreak. According to the National Statistical Office (NSO), India’s GDP contracted by a substantial 23.9 percent in Apr-Jun 2020; the first sharpest GDP contraction over 40 years. Though the Government is exerting immense efforts to tide over the existential crisis through increased infrastructure spending, the scenario is unlikely to get better before a couple of quarters. The lingering economic slowdown, coupled with the vaccine still under its testing stage, has turned people extremely apprehensive about their future investments, and the trend is quite evident in the real estate sector of Navi Mumbai.
While easing of the lockdown norms and reopening of realty projects for site visits improved traction in under-construction projects in Navi Mumbai; homebuyers desisted from purchasing big-ticket size properties. “The trend primarily followed on the back of two factors - firstly; the supply of ready homes reeled under pressure as developers struggled to keep their businesses ongoing amid the prevalent cash crunch in the market and disrupted supply chains. Secondly, the homebuyers’ reluctance towards bigger investments in the backdrop of the ongoing economic crisis remained a key challenge. The majority of homebuyers who had earlier planned to purchase a larger carpet area altered their decisions and opted for relatively smaller units to save for the unforeseen future. Besides, the execution risks attached to the under-construction units also contributed to the trend,” shares Vikram Shah, Property Consultant, Vikram Group.
The maximum housing demand for under-construction units in Navi Mumbai was in the areas of Panvel, Taloja, Ulwe and Dronagiri in properties priced in the range of Rs 30-65 lakh. While Kharghar near the Central Business District (CBD) of Belapur too received some enquiries, they were mostly for ready homes tagged at Rs 1-1.25 crore. Overall, the residential demand in the city improved by around 25 percent, QoQ; however, it was still at 35 percent of the pre-COVID-19 times.
The 99acres Mumbai Insite highlights that around 400 units were sold in the quarter depicting 25 percent growth as against Apr-Jun 2020. However, the trend emerged mainly due to the offers rolled out by builders on ongoing projects to counter the subdued demand in the segment over last one year. Typically, the under-construction segment across metros suffered a significant setback post the Non-Banking Finance Companies (NBFCs) crisis in 2018, which dissolved the homebuyers trust in the segment, leaving the developers in dire straits. Nevertheless, with the home loan interest rates at their lowest and developers negotiating the average ‘asks’ by approximately 5-7 percent, the demand for under-construction units improved for the first time in the city over the last four quarters.
The sentiment might improve further in the upcoming months as the festive period is around the corner, and many more developers may come forth with lucrative deals and offers. Nevertheless, Amit Goenka, Managing Director, Nisus Finance, avers that homebuyers must tread with caution and read between the lines as developers are facing a severe cash crunch in these trying times and may find it challenging to support the attractive payment schemes.” Hence, it is must that buyer exercise due diligence on the financial capability and track record of the developer before taking the plunge. It is better to consider upfront cash discounts on payments rather than freebies and other offers.