Property demand stable in south India

The Diwali season did not seem to bring in a lot of cheer for the real estate sector. According to a report recently published by The Associated Chambers of Commerce and Industry of India (Assocham), despite great offers made by developers on the eve of Diwali, investment in property has remained lukewarm.

This has been particularly true for markets in the northern India, especially the National Capital Region (NCR). According to experts, the reasons could be high prices of property, which in turn was because of high cost of construction materials, cement, labour etc.

There has been a surge in demand of only 20% on the eve of the festival as compared to the normal average sale per month. The builders and the investors say that they had been expecting a 100% jump both in new and the huge inventories lying at the disposal of the developers on the festival seasons like it did in the past.

Property analysts predict that till March next year, the demand for plots, houses and flats will drop further by around 15-20%.

The survey was carried out in major cities like Delhi-NCR, Mumbai, Bangalore, Chennai, Kolkata, Ahmedabad, Hyderabad, Pune, Chandigarh and Dehradun and gathered information from 250 property dealers, around 40 developers and builders.

However, the scene is different in the southern region. According to builders in the city, the Karnataka market is very different from that of north and a comparison cannot really be drawn between the two. According to S Bhaskaran, chief finance officer (CFO), Sobha Developers, the market in Bangalore is a lot more stable than that in Delhi.

“The market in south is not driven by festivities. Neither do we have a bullish season because of festivals nor do we have a dull season. If and when people have money, they go for real estate investment,” he said. According Bhaskaran, there is a huge demand for flats in the range of Rs 60 lakh-Rs 75 lakh. “We are at present in this segment and till now have not seen any dip in demand.”

Even experts say that south is more of an end-user market, hence the demand for property tends to be more stable.

“People who merely buy for investment purpose are far less in numbers in the south than in the north. Hence, fluctuation in prices is not very high in a market like south,” said an expert asking for anonymity.

Another aspect which builders highlighted was that of inordinate delays in getting necessary approvals from multiple regulations and authorities result in cost and times overruns. Also, the absence of industry status apathy of banks in financing the real estate projects, adds to the woes.

According to D S Rawat, secretary general, Assocham, the government should act as a facilitator rather than a regulator of the real estate projects, particularly where demand is more than supply.

“Approvals of real estate projects must be accorded in a time bound, accountable and simplified manner. Process and status of all approvals should be made online so as to bring in transparency,” Rawat said. Also, the government should complete their land records process and make the same computerised.