Diwali Dampens Real Estate Market: Sales Decline in Major Cities
Residential sales bookings have witnessed a significant drop of 10-15% in the run-up to Diwali due to rising property prices and a lack of new launches in cities like Mumbai, Hyderabad, and others. Developers initially anticipated a 20-40% increase in sal
Real EstateProperty PricesDiwali SalesResidential SalesLuxury HomesReal Estate MumbaiOct 31, 2024
Residential sales bookings have seen a significant drop of 10-15% in the run-up to Diwali due to higher property prices and a lack of new launches in major cities such as Mumbai, Hyderabad, and others. Developers initially anticipated a 20-40% increase in sales but now expect only 8-10% growth during the festive season.
According to Santosh Kumar, vice-chairman at Anarock Property Consultants, “Current trends suggest that there is a 10-15% decline in sales compared to last year’s same festive period.” The decline is largely attributed to the significant escalation in property prices over the past year, making it increasingly unaffordable for many homebuyers.
Escalating Prices and Sluggish Sales
Residential prices in the top seven cities have surged by 20-30% over the past year, which has significantly impacted the housing market. According to a recent Anarock report, housing sales in the third quarter of CY2024 dropped 11% year-on-year to 107,000 units, primarily due to high prices and the monsoon season.
Dhaval Ajmera, director at Ajmera Realty & Infra, noted that sustenance sales (sales from existing projects) are still happening, but there have been fewer new launches. This is partly due to the elections in Maharashtra and National Green Tribunal (NGT) orders, which have delayed project approvals.
Market Challenges and Future Outlook
Amit Bagri, chief executive of Kotak Mahindra Investments, which provides loans to developers, said, “Bookings in Q2 were hit due to delays in clearances and a subsequent decline in launches.” Despite these challenges, Bagri remains optimistic and expects a growth of 8-10% in sales bookings this festive season. “We expect approvals to come in Q3 and Q4. After two years of high growth, 8-10% growth is not bad,” he added.
Sameer Jasuja, founder and CEO of PropEquity, pointed out that the numbers will not surpass last year’s Diwali sales, which saw historic highs. “The first three quarters of 2024 have demonstrated lower absorption and launches across major Indian cities,” he said.
A managing director of a national real estate company echoed similar sentiments, noting that sales have been running fast over the past four years but questioning how long this trend can continue. “It is neither bad nor good; the growth is in between. I hope it will improve in December due to speedier approvals,” said the chief executive of a Mumbai-based real estate firm.
Positive Sentiment in South India
However, developers in South India remain optimistic about pre-Diwali residential sales. Viswa Prathap Desu, chief operating officer-residential at Brigade Enterprises, stated, “The sentiment this festive season is quite positive, and we see an increase in the number of enquiries. This is an auspicious time for making new investments in real estate, and we expect good sales this quarter.”
Vivek Venkateswar, chief sales and marketing officer at Shriram Properties, aims for a 20% boost in residential sales, driven primarily by the mid-market and mid-market premium segments. The company has launched four new projects across Bengaluru, Chennai, and Kolkata.
Demand for Larger Apartments
Top developers are witnessing strong demand for larger apartments. For instance, the average ticket size at Brigade is Rs 1.25 crore, with high interest in apartments priced between Rs 1.25-2.5 crore. “The luxury segment of Rs 2 crore and above is equally attracting interest, with good market acceptance,” Desu added.
Jasuja of PropEquity observed that luxury and premium properties are more in demand. “Luxury homes, those priced upwards of Rs 2 crore, are finding strong traction. In terms of configuration, homes upwards of 2,000 sq ft (except Mumbai) are in high demand,” he said.
Attractive Offers to Boost Sales
Some developers are offering freebies to attract buyers. To commemorate its 25th anniversary, Shriram Properties gifted homebuyers 2.5 kg of silver and an additional 25 g of gold during Dussehra. Currently, the company’s festive offer includes an iPhone 16 with every booking across select projects in Bengaluru, Kolkata, and Chennai, excluding certain new launches. The promotion lasts one week in Bengaluru and Kolkata during Diwali and for a full month in Chennai.
Frequently Asked Questions
What is the current trend in residential sales bookings for Diwali 2023?
Residential sales bookings have witnessed a 10-15% drop in the run-up to Diwali 2023 due to higher property prices and a lack of new launches in major cities.
How have property prices in major cities changed over the past year?
Residential prices in the top seven cities have surged by 20-30% over the past year, making properties increasingly unaffordable for many buyers.
What factors are affecting the real estate market in the third quarter of 2024?
Housing sales in the third quarter of 2024 have dropped 11% year-on-year to 107,000 units, primarily due to high prices and the monsoon season.
What are the expectations for Diwali sales in the real estate market?
Developers now expect a growth of 8-10% in sales bookings this festive season, down from the initially anticipated 20-40% increase.
Are there any special offers or promotions during the Diwali season to boost sales?
Some developers are offering freebies to attract buyers, such as Shriram Properties, which is giving an iPhone 16 with every booking across select projects in Bengaluru, Kolkata, and Chennai during Diwali.
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