rediff.com

NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News 
Rediff.com  » Business » Home sweet home indeed!

Home sweet home indeed!

September 10, 2018 19:46 IST

Bengaluru-based developers, such as Puravankara Limited and Sowparnika Projects, have witnessed over 85-90 per cent of their customers being first time buyers or end users.

Illustration: Uttam Ghosh/Rediff.com

 

Buoyed by the transparency brought in by the Real Estate (Regulation and Development) Act 2016 (RERA) and Goods and Services Tax (GST), first time buyers and end users are making a comeback in the residential market.

 

According to real estate developers as well as consulting firms, even in markets that were predominantly led by investors, residential sales has shifted towards first time buyers or end users looking to upgrade to a new home.

The trend can be observed in geographies like Bengaluru and Hyderabad, which are historically end-user driven markets and have seen traction in the last six months.

On the contrary, regions like Mumbai, Delhi and NCR which were predominantly investor-led markets have seen a fall in unit sales in the first half of 2018.

According to Samantak Das, chief economist and national director-research, JLL India, Delhi-NCR along with Mumbai were one of the most investor driven markets.

However, the tide has turned towards first time buyers and end users.

“End users are not coming in a full-fledged manner but are watching how deliveries are happening and transparency is being implemented.

"Whatever traction we see in the last six months is driven by first time buyers and end users.

"Cities like Hyderabad and Bengaluru are historically end-user driven and price rise in these cities is not as irrational as investor-driven markets where it had doubled in three years,” Das told Business Standard.

Knight Frank’s recent H1 2018 report also pegged growth in residential market in Bengaluru at 22 per cent year-on-year (y-o-y) in terms of units sold in the said period compared to last year.

On the other hand, Mumbai and Delhi NCR grew by one per cent and five per cent, respectively.

In fact, Bengaluru-based developers, such as Puravankara Limited and Sowparnika Projects, have witnessed over 85-90 per cent of their customers being first time buyers or end users.

“Depending on the category, most customers are buying their first home and the other segment is where existing or new customers are looking to upgrade to a new home.

"In the year FY 16-17, sales were approximately 1,850 units and FY 17-18 saw a total of around 2,800 units.

"In this ongoing year-to-date (YTD), that is, April to June of FY 2018-19, nearly 600 units were sold.

"In these sales too, 85-90 per cent of buyers were end users, which is very heartening for us as an organisation for the trust placed on us, making us one of the largest residential developers in the country,” said Ashish R Puravankara, managing director, Puravankara Limited.

For Sowparnika Projects, which sold 50 per cent of the 460-odd units of its new affordable housing project, the share of first time buyers stands at 80 per cent.

“These are either typically young bachelors or shopkeepers or e-commerce delivery guy or radio cab drivers with a decent household income,” said Ramji Subramaniam, managing director, Sowparnika Projects and Infrastructure Pvt Ltd.

The company is offering the units at price range of between Rs 900,000 and Rs 30 lakh.

Experts point out that, besides RERA and GST, the increasing share of affordable projects has drawn retail buyers to the real estate market while investors have taken a backseat.

“Demonetisation, GST and RERA will have long-term implications on the sector and we will soon witness a massive consolidation as small players and fly-by-night operators will find it difficult to survive amid the strict compliance regime.

"Also, these changes have pushed the investors and speculators out of the market and it now seems to be an end-user driven market offering good deals for the buyers,” said Santhosh Kumar, vice-chairman of ANAROCK Property Consultants.

The onset of such regulation along with enhanced government vigilance over benami properties have led to investors shying away, said Das.

“The sector has become much more transparent. Investors are not finding the sector as lucrative as they found it since 2011-12.

"Instead, in the last six months, end user fraternity have shown increased traction. It is not a big increase in sales, but whatever is moving is moving through the end user,” he added.

Vinay Umarji & Debasis Mohapatra in Ahmedabad/Bengaluru
Source: