Realtors rebuild hopes on rising home sales

Realtors rebuild hopes on rising home sales
Business Standard, August 07, 2009, Page 1

Raghavendra Kamath / Mumbai

After a long hiatus, home sales are finally back on track. Sales of major real estate developers have more than trebled in the June quarter compared to the preceding three months, amid growing expectations that the good times will continue to roll.

Consider this: DLF, the country’s largest real estate developer by market value, has sold 2,500 apartments in the first quarter of the current fiscal, compared to nearly 600 in the quarter ended March 2009. In the preceding quarter, DLF had sold just about 120 apartments.

Unitech, the country’s second largest property developer, went a step further and sold 5,000 units in the first quarter, compared to 300 to 400 apartments in the preceding quarter.

Delhi-based Parsvnath Developers did 100-odd transactions against 25 to 30 in the previous quarters, and Omaxe reported sales of 700 units, compared to 200 in the same period.

“After a few difficult quarters last fiscal, we have seen a fairly good first quarter of the current fiscal. The economy on the whole has been showing signs of recovery, and activity in real estate has picked up,’’ DLF Vice-Chairman Rajiv Singh said.

Almost all of them are convinced that the future looks bright. While DLF’s Singh said he expected the market to improve, a Unitech spokesperson said the market would pick up in the second quarter, though demand would be mainly for affordable products.

“It is a good time to bargain-pick now,” said Ravi Ramu, director of Bangalore-based Puravankara Projects.

That the first-quarter sales are no flash in the pan is reflected in the fact that developers have lined up around 60 million square feet of new launches this year, more than double last fiscal’s bookings.

DLF plans to launch 8 to 9 million sq ft of city centre projects in Chennai, Kochi, Delhi and Gurgaon and 5 to 8 million sq ft of mid-income housing projects in the National Capital Region and southern cities. Unitech has launched buildings covering 15 million sq ft since April and plans to launch an additional 15 million by March 2010.

Apart from lower interest rates and affordable housing, the reduction in the number of fence-sitters has helped in a major way. ICICI Bank Chief Financial Officer N S Kannan said buyers had been postponing their purchase decisions in the hope that prices would fall further.

“There is a general sense now that prices have stabilised,” he said, adding “our disbursements, month-on-month, have increased and we would like to play in that market based on our current strategy on pricing”.

Though Kannan was not willing to comment on a specific number, sources in the bank said it was expecting a 20 per cent growth in disbursals in the second quarter.

SBI, the country’s largest bank, has set a monthly home loan disbursal target at Rs 2,500 crore compared to Rs 1,500 crore disbursed over the last few months. The bank is targeting a home loan growth of 30 per cent in the current fiscal against 21 per cent in 2008-09.

HDFC, the country’s largest home loan lender, saw its disbursals rise 22 per cent in the first quarter and expects the trend to continue.

While several property developers have ventured aggressively into Rs 20-Rs 60 lakh apartments and launched properties that were 20 to 30 per cent lower than the prevailing rates, interest rates have also softened in the last six months, which eased the monthly loan pay-outs of home buyers.

In December, the Indian Banks’ Association (IBA) and its members in December had announced new rates, under which loans up to Rs 5 lakh was offered at 8.5 per cent and those between Rs 5 lakh and Rs 20 lakh at 9.25 per cent.

Private sector banks have also reduced their retail lending rates 50 to 100 basis points in the December 2008-June 2009 period.

Analysts are also gung-ho. Pankaj Kapoor, chief executive of Liases Foras, a real estate research firm, said the momentum would increase after Diwali. “Now we are seeing a momentum for some time, lull for the next few days and then momentum. This will change as the economic recovery gathers steam,’’ he said.

(Additional reporting by Neeraj Thakur and Sudeep Jain)