The Covid-19 pandemic has impacted the global economy and almost all industries across the world, including real estate. Low housing sales, muted launches, and rise in unsold inventory have become a norm. According to a study by Anarock, housing sales and new launches have plunged to a new low across India’s top 7 cities in Q2 2020. Housing sales, in fact, dropped 81% y-o-y in Q2 2020, while new launches fell by 98%.
To deal with this crisis, push sales to prospective homebuyers as also to reduce inventory pile-up, many developers now-a-days are sweetening property deals and are also coming out with innovative schemes.
Industry experts say, while it is true that the COVID–19 outbreak has mired the sector in the gloom, it is unlikely that unsold inventory will see much change in the immediate future. Given the current situation, developers will continue to refrain from launching new projects or limit them to the greatest extent possible, due to the inventory overhang. Although developers are being urged to reduce prices to clear unsold inventory, certain market dynamics require consideration.
“Most developers stand over-leveraged and are struggling with liquidity today as even before the pandemic, the market sentiments were down. The sector was already reeling under the effects of regulatory and procedural changes, demonetization, GST, and the onset of RERA. Under such circumstances, any reduction will only further impact margins and affect the development and the prospects of the sector,” says Nimish Gupta, MD, RICS South Asia.
Additionally, lowering prices beneath the circle rates will flout income tax norms and can warrant penalties to be issued against developers. However, the silver lining is developers can look at using the unsold stock for rental housing, in light of the AHRC announcement by the government.
Amidst the uncertainty, large discretionary spending, including housing, has been put on the back burner. Given the conditions on the buyer side where consumer sentiment and confidence has been greatly shaken by the COVID pandemic, sweetening deals with freebies and discounts might prove to be encouraging.
With the festive period around the corner, homebuyers can also look forward to attractive schemes like waivers of charges such as stamp duty and registration fees, innovative payment schemes such as deferred payment options to buyers, no EMI until possession, refundable booking amounts within 90-120 days, subvention plans, cashback schemes, freebies on booking, for e.g gold coins, smartphones.
“Some offers may even include fully or semi-furnished apartments, including air conditioners and free modular kitchen, club membership, parking space, and no GST, among others. However, the need of the hour is to adopt an innovative, out-of-the-box approach to sell the unsold stock. There are a few enterprising developers who are selling not just a piece of property, but customer experience with ingenious services. For instance, there are examples of developers offering to sell a customer’s existing property within a stipulated timeline, if they book a new property with the developer by paying 5% only,” says Gupta.
Whatever be the case, it is not unusual to see some of such offers in the current market scenario, although this is not a uniform dynamic across the industry, and lots of these offers and discounts vary from project to project. In fact, from the Lodha Group to the House of Hiranandani, and from Godrej Properties to the Elan Group, most of the builders have already launched or are trying to introduce some innovative schemes to give a boost to their sales.
The Lodha Group, for example, recently came out with its Apna Ghar Apna Desh initiative to enable active home seekers fulfil their dreams. Under this initiative, payment of only Rs 1.98 lakh was needed initially to buy a home and the lowest-ever interest rate of 5.99% on home loans was also introduced by the company.
Talking about the offer, Prashant Bindal, Chief Sales Officer, Lodha Group, says, “Based on market research conducted during the lockdown, Lodha found that a large number of people were keen to buy their own homes and enjoy the safety and comfort of keeping their families in a high-quality development. However, high down payment and high interest rates were some of the key impediments in the home buying process and hence, the brand put together the Apna Ghar Apna Desh initiative that enabled active home seekers to fulfil their dreams.”
The House of Hiranandani, on the other hand, has deployed a series of new prop techs such as 360-degree tours of projects, virtual reality, and video conferencing to provide the buyer with an immersive experience of the property. “Through these digital tools, we have successfully given them a sense of what the brand has to offer, even while the buyer is situated at a distance and has never visited the property. Our digital promotions are working well and we have witnessed a rise in the number of enquiries. Serious home buyers are using this time to digitally experience the property along with their family members and solve all their property related queries,” says Prashin Jhobalia, VP – Marketing Strategy, House of Hiranandani.
Now, in a bid to provide monetary benefits to the buyers, House of Hiranandani also has a few plans in the pipeline which include a rental back scheme.
“We are sure these schemes, as our robust digital sales infrastructure, will work positively for us. So far as the realty sector is concerned, the unprecedented situations that have arisen out of the pandemic have encouraged the real estate fraternity to optimize the use of technology and innovation in the day-to-day business. Along with enabling easy access to projects through virtual mediums, developers are also opting for other monetary benefits to make home-buying a lucrative experience. The new innovative offers to attract homebuyers include flexible repayment options, EMI waiver, reduced booking amount, cashback schemes, freebies on booking, deferred payments, offer for ready-to-move apartments, easy payment holiday, among others,” says Jhobalia.
The Gurgaon-based Elan Group has announced fixed rentals for two years on its 1BHK and 2BHK ready-to-move-in luxury serviced apartments, named Altura, located at Sector 80, Gurugram.
“COVID-9 is going to change the lifestyle of people completely. The preferences for new-age home buyers have also changed due to the crisis. They are now looking for self-sustained residencies where a person would not have to move out for any retail, entertainment or dining need. Keeping this in view, builders are redesigning their projects and are also adding new facilities to increase the safety and comfort of homebuyers. To cater to the needs of such people, we have come out with this exciting offer on our Altura project,” says Ravish Kapoor, managing director, Elan Group.
Rahul Singla, director, Mapsko Group, says, “Given the outbreak of COVID-19, the work from home culture has gained acceptance. Corporates have realized its benefits and so have the realty players. We have also introduced innovative schemes in our upcoming project, clubbed with freebies to tempt the buyers. These innovations include work from home-supportive features like Conference & Meeting Rooms, Business Centre with Work Stations, Multipurpose Room, among other amenities, which will be of great comfort to the buyers.”
(Source: Financial Express)
