Forget discounts, buyers look for good, on-time projects

Madhav Bindra had been planning on a real estate investment for the last two years and singled out a local builder’s project in Noida a few months before the festive season. His priorities were an upcoming location, good facilities and a pocket-friendly house for four, not discounts.

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You would have heard consumers deferring their purchase for the festive season. ‘SALE’ is one word that most buyers love. Be it for electronics, clothes or real estate. Most developers look forward to a festive season to tackle their unsold inventory. With the kind of stagnant property market that most cities have faced in the last few quarters, many city based builders approached by Magicbrickes were ready to offer discounts! But, buyers today, are cautious and clear – they need something more than just discounts!

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Anuj Puri, chairman and country head, Jones Lang LaSalle says, “Sales velocity during this festive season remained uninspiring despite the various attractive pricing schemes and discounts that developers have offered. However, the current scenario is not indicative of what lies ahead for the real estate market, for which the outlook remains very much positive.”

Timing

“The events that have catalysed the market recovery –the new government at the centre, its pro-business policies, the encouraging Union Budget and provisions announced favouring real estate – will need more time to bring their benefits on the market,” says Puri.

“Residential property buyers continue to remain cautious. This is actually positive, because in a healthy market environment, supply needs to take its cues from on-ground demand,” adds Puri.

Quality

This is one of the top focus among buyers today. Rohan Sharma, associate director, Research and REIS at Jones Lang LaSalle says, “It is imperative that buyers understand what payment plans entail. The attraction of delayed payments, no EMIs, etc has to be viewed in conjunction with the restrictions such as inability to sell the property within a shorter investment period or before construction is completed.”

Perhaps, buyers are aware of this. Vipul John, an analytics professional in Bangalore says, “Most buyers would be cautious because the scenario looks just like a clearance sale in a lifestyle shop. Products that were hard to sell are put up on sale and flat discounts are offered. So while you might not like the quality, the seller believes he has done justice by giving you a sizeable discount. The fresh stock is always better.”

Good time to buy

“When the market is slow, it is easier to locate quality. Consumers are quick to arrive at their choices because a trusted developer’s brand always stands out,” says Sameer Trivedi of Realty Ally.

Raj Chauhan, consultant at Real Estate Investment Advisory believes, “Investor take a backseat in a buyer’s market because he has the benefit of time. Actual end-users are always active.” This means that while discounts and freebies are attractive, it is not the sole incentive to buy. The buying decision is the biggest determinant.

Puri informs, “Price corrections could induce sales in certain pockets but it is unlikely as developers are not keen on a correction especially with pent up demand. New projects are being announced at lower prices.”

As per the Housing Sentiment Index (HSI), Jul-Sep 2014, a joint initiative undertaken by Magicbricks and IIM-Bangalore, most buyers across Indian cities are optimistic about buying property but have postponed the buying by six months to a year. Resultantly, the unsold inventory is considerable and the discounts may continue even after the festive season is over.

Advice from the wise

Perhaps it is too early to believe that the festive season failed to boost sales. Ashutosh Limaye, head, Real Estate Intelligence and Research at Jones Lang LaSalle expects maximum activity to peak towards November and December. As per him:

    Offers restricted to areas having large volumes of unsold inventory
    Do not wait if you find a suitable project
    Engage with developers and explore your options
    Be ready with your homework for the best deal

Experts at Magicbricks believe, “A gold coin or a car is not the incentive. Buyers are looking at the fundamentals – good projects and timely delivery. Keeping the large supply in mind, one can safely negotiate for a 8-10 per cent. Projects closer to delivery have a better chance.”

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Source: http://content.magicbricks.com/industry-news/forget-discounts-buyers-look-for-good-on-time-projects/77753.html