We are past the three-quarter mark of 2019 and it has been an eventful year so far. In the residential real estate space, here are a few key developments that stand out. Overall, homes are cheaper as most Indian cities saw housing prices fall, or the rise in prices has been lower than the consumer price inflation. Reductions in the GST rate to 1% for affordable housing and 5% for other categories has helped improve buyer perception to a certain level.
Coming to the demand side of things, reducing interest rates and lesser home loan EMIs have nudged demand but buyers prefer ready-to-move-in homes than those under construction, unless the developer is financially credible and has a proven delivery track record. On the supply side, post RERA, builders have become extremely cautious, and are focusing on completing their ongoing projects instead of launching newer projects. Affordable housing has been administered a shot in the arm with the announcement of the right tax cuts and the government setting a massive target for itself under the ‘Housing for All’ initiative.
Currently, a necessary clean-up and consolidation has left behind stalled projects, defaults, low sales and an industry in a sort of crisis. As widely known, the prolonged stress in the real estate sector is due to many different factors, like the challenges of financing the failing NBFCs and the stiffened regulatory and fiscal environment for developers. Also, while housing prices have remained unchanged or are even sliding southwards, there has been an increase in the input and construction costs for developers.
Despite these headwinds, a close look will reveal that demand has not dwindled but has merely shifted towards credible developers who are building and marketing homes in line with the market pulse. This is a trend across most industries. Take the automobile industry for instance. Like most automakers, Hyundai and Kia too have faced their set of demand related problems but these companies were quick to realize that in a world of shortening product cycles, success depends on truly newer products, which also spell value for money. By responding to this market pulse earlier than the others, both auto makers have adopted a rapid product refresh cycle, boosted by top of the line celebrity endorsements. As a result of this course correction and some highly leveraged marketing campaigns, the returns for both Hyundai and Kia have been handsome.
Across industries today (and real estate is no exception), adapting quickly to ever-changing market dynamics and trends is the only path for survival and growth. When project delays and stalls plague the entire nation and are dragging down home buyer sentiments, the demand for housing has shifted towards affordable homes that come with a quality and on time delivery promise. Essentially, keeping in line with the Indian consumer’s core thoughts. Is it contemporary? Is it credible? And, does it spell value for money? Once these basics are set, creating a buzz by leveraging a trend generates substantial rewards.
At Square Yards, we follow market pulses diligently to create a constantly evolving bouquet of projects which tick all the right boxes for today’s home seeker. Then, we internally analyse the value for money and investment proposition to ensure that once leveraged by the right marketing campaign, the pent-up demand for homes takes over and delivers results. Expansive and targeted campaigns that harp on best products, lowest possible pricing and delightful post sales service are then leveraged to pass on this information across markets we operate in. Sometimes, like with our Housefull4 association this season, we even throw in a little glamour and give our customers a chance to spend Diwali with Akshay Kumar at his home!
In the current phase of Indian real estate’s uphill journey, this tested approach can help businesses build a wide and deep presence, both geographically and in the home buyer’s mind.