Despite the general slowdown in the real estate sector in the country, this year saw a rise in sales volume and enquiries, mostly restricted to ready-to-move properties highlighting buyer’s distrust in newly launched and under-construction units.
Though the real estate market is likely to improve with efforts like cut in repo rates, increasing foreign direct investments (FDIs) and rise in private equity funding taking place, yet the under-construction inventory will still take three to four years to offload completely. Faced by incessant delays, buyers have become distrustful of the under-construction and newly launched properties. “Most of the transactions taking place in the city are for ready-to-move properties. The demand for under-construction properties is negligible,” says PS Verma of Vaishnavi Properties, a broker firm active in Hyderabad.
According to Knight Frank Residential and Office market report (Jan-Jun 2015), “There has been a consistent decline in unsold under-construction inventory levels in Chennai, which is helping in the recovery in sales numbers.” This is the case in every city. Localities with high supply of ready-to-move properties have seen slight appreciation in property prices as well.
Observing this trend, even the developers are focusing on completing their projects in order to sell them off quickly. Majority of the money generated via the private equity (PE) deals have been used in completing the projects. In absence of loans from banks and investors, PE investors have been crucial in bringing the liquidity back in the Indian real estate market.
Another major reason behind the rise in demand of ready-to-move properties is that the realty, irrespective of the city, is currently been driven by end-users. “Due to low returns in the residential market in comparison to equity and debt, investors are expected to stay away,” the report adds. End users have shown a willingness to only buy the already completed project with all the paperwork available.
Another reason for ready-to-move projects becoming popular is the reducing gap in prices between these units and under-construction units. In order to further attract the end users, developers are offering freebies and discounts with ready properties. Such deals have made the price of ready-to-move properties almost equal to that of under-construction properties.
In order to aid end-users, here is the supply of available ready-to-move properties, according to Insite Jul-Sep 2015: