Rebound in realty?

Rebound in realty?
The Hindu Business Line, May 31, 2009, Page 15

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Though it is difficult to say that there is a general revival in demand in the property market, buyer interest in certain projects in specific locations seems to be back.

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Moumita Bakshi Chatterjee

Nearly a year after the demand slowdown, the property market sentiments seem to be improving, according to real estate companies. Builders across the market segment are claiming that the last two months have witnessed a surge in bookings and interest, ending months of anxiety on cash flows that had led to project delays, and left customers fuming.

Adding to the cheer in the market is also the institutional interest in real estate space. A slew of realtors, including HDIL and Parsvnath Developers, are following the footsteps of Unitech and Indiabulls Real Estate to line-up QIP issues in a bid to ease the debt burden.

Difficult to generalise

Analysts watching the real estate space, however, say that with each macro market behaving differently, it is difficult to generalise the mood in the property market. While they admit that buyer interest in certain projects in specific locations seems to be back, they also believe it is too early to term it a “demand revival”.

“We will wait to see the cash flow situation of listed real estate companies at the end of the quarter before cheering the market,” they say. Also, there seems to be unanswered questions on who is really picking up residential inventory.

An industry insider pointed out that in specific cases in North India it is not unusual for brokers to drive-up the demand by cornering housing inventory at steep discounts from players. These brokers then offload the inventory to end-users. “That trend may still be there. So one has to wait and watch before declaring that the end-user demand is indeed back in the property market,” the person said.

Realtors optimistic

Realtors, however, feel that the general sentiments are lifting.

Earlier this week, two realty firms — BPTP and Jaypee Greens — said they received “overwhelming” response to their affordable housing projects in Delhi NCR. BPTP said its bookings were nearly four times more than the number of flats on offer at Faridabad where it is selling ‘BPTP Park Elite Floors’. “Launched on May 9, with an initial target of 1,000 units, booking had to be closed within 15 days due to the heavy demand. By the closing date of May 26, the company had received a booking of 3,700 units,” BPTP said.

Jaypee Greens (a real estate division of Jaiprakash Associates) too said its 3,300 apartments were booked within 24-hours of the launch of its residential project Jaypee Greens AMAN at Noida-Greater Noida Expressway.

And similar sentiments are being echoed in other parts of the country as well. For instance, in its Cosmopolis project in Bhubaneswar, Assotech says that it has signed up 100 booking in the last 45 days alone. The price tag for the project is Rs 27-46 lakh. The company said the demand for its other projects in Gwalior and Rudrapur too are looking up.

“Yes, things are improving. While it is still difficult to gauge the medium-term outlook, the elections and the clear mandate coupled with some improved buying sentiments have resulted in a flow of bookings. Customers in smaller markets, who need a house for their own requirements, are willing to take the plunge. The investors will come in at a later stage,” says Mr Sanjeev Shrivastava, CMD of Assotech Group.

‘Hype about slowdown’

A senior official of Lodha Group — a builder with presence in and around Mumbai and upcoming projects in Hyderabad and Pune — feels that the “hype” about slowdown had been overblown, and that there has been a turnaround post-December 2008.

The company claims that it has sold 2.5 million sq. ft of residential space in the last five months against a third of that level during July-December.

“The demand-supply mismatch still exists, and so there cannot be a prolonged recession in demand for rightly priced homes,” says Mr Abhishek Lodha, Director, Lodha Group.

In April, DLF said it got bookings for 1,356 apartments (2 million sq.ft) in a single day in its project Capital Greens at New Delhi. A presentation by Unitech to its investors earlier this month, put the area sold by the company between April 1 and May 15, at 2.5 million sq.ft.

The company said that the overall sale value of the properties which had been booked will add up to about Rs 850 crore. Unitech has already outlined plans to launch 40 projects across 15 cities, including Delhi NCR, Mumbai, Kolkata, Mohali/Chandigarh, Chennai and Lucknow.

Real estate companies have discovered the market sweet-spot in the affordable and mid-income housing space, and are tuning strategies accordingly, a senior Unitech official recently told Business Line. Though the claims of the real estate companies point towards some recovery in the market, analysts are waiting to see how events unfold in coming months.

At least for now, the jury is yet not out on this one.