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  • 27 OCT

    Starting on a Positive Note

    The ongoing festive season up to December 2016 is expected to augur well for residential real estate transactions

    Buying a home of one's own has over the years become symbolic of the great 'Indian Dream'. When it comes to owning a home, there is a lot of sentiment attached. Especially among Indian families, the festive season is period of heightened excitement for those looking to buy residential properties. The festive period, which starts with Ganesh Chaturthi in September, covers the Navratras, Durga Puja and Diwali in October, and leads up to Christmas in December and the New Year, is considered aus-picious for home purchases.

    Sales increase

    The residential market in India, after a slow phase, have already started witnessing traction during the first quarter of FY'17, with sales seeing a quarterly in-crease of 8%, compared to a q-o-q decline of 3% in Q4 FY'16.

    The seasonality analysis of residential sales, in last three years, across the top 9 cities of India, reveals that while the sales growth during October-December festive period largely remained flat compared to pre-festive quarter (July- September) during both the FY'2014 and FY'2015.

    However, the combined residential sales across top-9 cities increased by 9% during festive season of FY'2016 compared with the prefestive quarter (Ju ly-September), the magnitude of increase in sales during the same period across the cities varied between 19% to 20%.

    Contribution during the fiscal

    Broadly the contribution of festive quarter sales to total sales during past financial years have been in the range of 24-25% While Bangalore, Ahmedabad, Kolkata and Hyderabad have seen an increase in total sale share during the FY'16 festive season compared to FY'15 festive period, other cities have largely remained stable or declined mar-ginally.

    The analysis of festive quarter sales by cities compared to pre-festive quarters over last 2 financial years reveal that while Mumbai and Pune have seen a continued trend of higher sales during the festive periods consecutively for last 2 years, the cities of Ahmedabad, Bangalore, Hyderabad and Kolkata also joined the party during FY'16.

    Policies impact growth

    The festive season this year (FY'17) is expected to be better than FY'16, given the incremental improvement in market senti-ment coupled with slew of central and state government's measures to boost the sector.

    Some of the important measures include the passing of the Real Estate Regulation Bill, GST Bill and the Benami transactions Bill, besides relaxation of rules for REITs. In addition, the implementation of the 7th Pay Commission recommendations to increase Central government employees' wages, lower interest rates, a robust local economy and muted property prices are all expected to augur well for the sector.

    Rise in Launches

    With a visible increase in new launches and marketing activity, developers seem to have become proactive in the runup to the festive season. Many reputed developers, eyeing the opportunity that lies in the festive season, have already launched or are launching large-scale residential projects.

    Also, the festive season in October-December is likely to see developers trying to woo customers by offering additional freebies like gold coins, furnishings, air conditioners, modular kitchens and wardrobes on the purchase of housing units. Developers may also offer automobile, waiver of floor rise charges, stamp duty and registration fees, membership of premier clubs and holiday packages, to sell some of their luxury projects during the period.

    The financial institutions have also been proactive in the market to cash in on the coming festive season opportunity by bringing attractive home loan products m the market. Overall, the coming festive season is likely to be positive for the real estate market and lead to an uptick in sales dur mg the coming festive season.

     

     

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