Top developers sometimes launch new projects, even when the market is witnessing a slowdown and there is a sound logic behind this. There is always demand for residential projects at convenient locations and with good amenities. If the pricing of the project is also in line with what buyers are willing to pay, there is no reason why sales will not be generated.
Sales are happening for the right type of projects
Market research confirms that sales are taking place, even if it is at a slower rate, for the right type of projects. It is projects in the wrong locations, with fewer or the wrong kind of amenities and with the wrong pricing that are finding no takers. Over the past year, real estate prices have exhibited a gradually decreasing trend. Developers are now offering lucrative deals and discounts, thereby, helping to create an end-user-driven market, rather than just pandering to investors, as had been the trend in the past.
Overall, the residential real estate segment has reached its lowest trough, with respect to prices and sales. From now onwards, the graph will begin rising. The Indian economy has strengthened and will continue to gain in strength. The government is also extending more support to the real estate industry than ever before, and the cumulative results of these favourable circumstances, will definitely be seen from this year. As India pursues its development agenda, interest in real estate investment will increase steeply over the coming years.
Aligning supply to demand
Today, Indian cities accommodate only about 40% of the country’s population. However, as economic growth increases, more and more people will shift to urban areas, spawning greater demand for homes in all price ranges. Developers, who continue to launch their projects even while the market is slow, are investing in this future. Most of the unsold projects in India, are the result of poor planning on the part of their developers. They have chosen flawed or hopelessly futuristic locations, where people are not interested in moving and/or have included high-end amenities that drive up the overall cost beyond what buyers are willing to pay. Presently, new residential launches are more aligned with the existing demand, both, in terms of pricing and what they have to offer.
(The writer is CMD, Amit Enterprises Housing Ltd)