AHMEDABAD/SURAT/VADODARA: With consumers mainly spending on basic necessities after demonetization, real estate sales, especially of residential units, have seen a decline in cities such as Ahmedabad, Surat and Vadodara in November. According to developers, bookings slumped by 90% in Ahmedabad and up to 30% in Surat and Vadodara from the monthly average.
The sluggishness is further reflected by a sharp dip in property registrations. Ahmedabad, Surat and Vadodara have seen registration of documents fall by 63%, 74% and 62% respectively. Against a conservative average sales estimate of 2,000 residential units per month in Ahmedabad, roughly 200 bookings were made in November, which comes to just 10%.
“Sales have dried up as consumers are still on wait-and-watch mode. Although we get genuine enquiries they are not getting converted into sales owing to prevailing market uncertainties,” said Dipak Patel, president, Ahmedabad chapter of Confederation of Real Estate Developers of India (CREDAI). The decisions to buy a property by prospective buyers have been held back on hopes of a reduction in realty prices and home loan interest rates.
Both developers and consumers are also keeping their fingers crossed as to what will be the next move of the government after December. “Consumers spending has seen a major cut after demonetization. Rationed spending has affected not just real estate but almost all industrial sectors,” added Shekhar Patel, all-India treasurer of CREDAI.
The hopes of a cut in home loan rates were dashed as banks did not reduce rates after the Reserve Bank of India kept the repo rate unchanged. Simultaneously, land deals too have taken a major hit with no such transactions taking place in the last month due to the cash crunch.
However, the scenario is little different in Surat where sales declined by 20%-30% from last month. “There was no major slump in sales as builders, who had already disclosed large sums in the Income Declaration Scheme (IDS), accepted demonetized notes and went for ‘pushed sales’. The affordable housing sector is also growing in the diamond city,” said Velji Shetta, president, Surat chapter, CREDAI. Roughly 1,500-1,700 residential units are sold in Surat every month.
Vikram Gupta, CREDAI president, Vadodara chapter, said, “The average sale of units in the city and VUDA limits was about 7,000 per month but sales have now come down by about 30% after November. But it is a temporary phase and I am sure things will be back to normal in the next two months.”
Contrary to buyers’ hopes of a fall in property prices, realtors do not see prices coming down. The state government plans to put in place a system for frequent revision of jantri rates to reduce the gap between market prices of properties and basic rates. “We expect property prices to move up if jantri rates are revised.
The increase will depend on how much jantri rates are raised,” added Dipak Patel. Increased compliance under Real Estate (Regulation and Development) Act (RERA), 2016 from next year will put an additional burden on buyers, say developers.
Credits ET Realty