In the next three months, hefty discounts being provided to home-buyers will completely disappear, as Ahmedabad turns into a “zero-negotiations market” before Diwali, say real-estate experts while pointing to the rising sales and escalating prices of new homes being built in and around the city.
“A year ago, real-estate developers used to provide discounts in the range of 15-20 percent. Currently, the quantum of discounts have come down to 5-7 percent. In the next three months, negotiations will completely go out of the table, as developers will refuse to give discounts,” said Saurabh Mehrotra, National Director (Advisory Services), Knight Frank, a global real-estate consultancy firm.
In the annual property show organised in October 2015 by city-based body of real-estate developers , Gujarat Institute of Housing and Estate Developers (GIHED), a wide range of freebies, like “buy two, get one plot free,” two-wheelers for on-the-spot bookings and discounts as high as 25 per cent, were offered to home-buyers. Such discount schemes are no more to be seen.
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“The positive sentiment in the residential market due to the revival in manufacturing activity, the improving business sentiment and the renewed interest in Gujarat International Finance Tec-City (GIFT) from investors are expected to usher in a double-digit growth in new launches and sale in the second half of 2016. We forecast that new launches and sales will increase by 27 percent and 15 percent, respectively,” states a report by Knight Frank that was released Monday
Sentiments among home buyers is seeing a marked improvement as the sales volumes — that has been falling since the last four years — have been arrested in the first half of 2016 (January-June). Sales of homes in Ahmedabad have increased by 10 percent to 8,550 units between January-June 2016, as compared to the 7,750 units sold during the same six-month-period in 2015, the report adds. The current sales are still a far cry from the first six months of 2012 when more than 16,000 units were sold.
Even prices of homes in the city are seeing a rise. Between January-June 2015, the average price of housing units rose by 5 percent. The premium segment , i.e the houses costing Rs one crore and above clocked the highest rise of nine percent.
Jaxay Shah, the President-Elect of CREDAI (Confederation of Real Estate Developers’ Assocations of India) and a leading developer in Ahmedabad says, “The sales have surely picked up. Most of the traction is in the Rs 25-50 lakh housing segment. I have myself launched a couple of new projects in the last six months. One of the them with 280 units has been completely sold, while we have already sold 85 units in the second one. Our footfalls, that has been just 10 people during the first three months between January-March, has increased to 40. These are serious home-buyers I am talking about.”
In spite of the rising sales, the biggest worry for developers in Ahmedabad is the unsold inventory which currently stands at 40,000 housing units. “The high level of unsold inventory is a big concern for Ahmedabad’s developer community. Despite improving sales volumes in the last six months, the unsold inventory level has not reduced significantly, as developers continued to launch new projects,” states the Knight Frank report. Since the last one year, the unsold inventory — which also includes under construction properties — have been stagnating at the 40,000 units-mark.
In the first half of calendar year 2016, a total of 8,800 new housing units were launched, which is nine percent more than the 8,060 units launched during the same January-June period in 2015. These numbers are still drastically low from the heydays of 2011, when more than 27,000 housing units were launched in a six-monthly period.
North Ahmedabad with locations such as Gota, New Ranip, Tragad, Chandkheda and Motera has witnessed the maximum launches of housing projects. This region has emerged as the “most preferred destination” for mid-segment housing as 70 percent of the new houses launched have been below the ticket size of Rs 50 lakh.
South Ahmedabad with areas like Narol and Vatva, have seen the lowest number of new launches. Here the number of new projects have fallen by 47 percent compared to the six-month period last year. “While more than 85 percent of the total unsold inventory available here is below the ticket size of Rs 25 lakh, home buyers seem to be staying away from this market. Poor connectivity to the city centre, the presence of multiple manufacturing units and lack of social infrastructure have limited this market’ attractiveness,” the report stated.