Diwali Housing Sales Slump for Real Estate Developers
Residential sales have dropped 10-15% this Diwali due to higher prices and a lack of new launches in major cities like Mumbai and Hyderabad. Despite initial expectations, the festive season is not meeting last year's high sales numbers.
Real EstateDiwaliProperty SalesResidential MarketLuxury HomesReal Estate NewsOct 31, 2024
At the beginning of the festive season, developers were optimistic, expecting a 20-40% surge in sales. However, the current trend suggests a more modest 8-10% growth, 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 festive period,” Kumar remarked.
The decline is largely attributed to a significant increase in property prices over the past year. Residential prices have surged by 20-30% in the top cities, making it increasingly unaffordable for many potential buyers. “It is becoming unaffordable for many to buy a property today,” Kumar added.
A recent report by Anarock indicates that housing sales in the top seven cities in the third quarter of CY2024 dropped 11% year-over-year to 107,000 units. Factors such as high prices and the monsoon season have contributed to this decline.
Property developers like Dhaval Ajmera, director at Ajmera Realty & Infra, noted that while sales from existing projects are steady, new launches have been delayed. “Elections in Maharashtra and National Green Tribunal (NGT) orders have delayed approvals,” Ajmera explained.
Amit Bagri, chief executive of Kotak Mahindra Investments, which provides loans to developers, mentioned that bookings in the second quarter were affected due to delays in clearances and a subsequent decline in launches. “We expect approvals to come in Q3 and Q4. After two years of high growth, 8-10% growth is not bad,” Bagri said, adding that big listed developers are meeting their guidance.
Sameer Jasuja, founder and CEO of PropEquity, said the numbers will not surpass last year’s Diwali, which saw historic high sales and launches. “The first three quarters of 2024 have shown lower absorption and launches across major Indian cities,” Jasuja noted.
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, particularly in the mid-market and mid-market premium segments. The company has launched four new projects across Bengaluru, Chennai, and Kolkata.
Top developers are witnessing strong demand for larger apartments. For example, Brigade’s average ticket size is around Rs 1.25 crore, with a high interest in the Rs 1.25-2.5-crore category. “The luxury segment of Rs 2 crore and above is also attracting significant interest,” Desu said.
Luxury and premium properties are in high demand, according to Jasuja of PropEquity. “Homes priced upwards of Rs 2 crore, especially those larger than 2,000 sq ft (excluding Mumbai), are finding strong traction,” he added.
To attract buyers, some developers are offering attractive incentives. Shriram Properties, for instance, gifted homebuyers 2.5 kg of silver and an additional 25 g of gold during Dussehra. Currently, their festive offer includes an iPhone 16 with every booking across select projects in Bengaluru, Kolkata, and Chennai, excluding certain new launches. The promotion is valid for one week in Bengaluru and Kolkata during Diwali and for a full month in Chennai.
Frequently Asked Questions
Why have residential sales bookings dropped this Diwali?
Residential sales bookings have dropped due to higher property prices and a lack of new launches in major cities like Mumbai and Hyderabad. The increase in prices has made properties unaffordable for many potential buyers.
What were the initial expectations for Diwali sales?
Initially, developers were expecting a 20-40% surge in sales during the festive season. However, the current trend suggests a more modest 8-10% growth.
How have property prices changed in the past year?
Property prices in the top cities have increased by 20-30% in the past year, making it increasingly unaffordable for many potential buyers.
What factors are affecting new launches in the real estate market?
New launches have been delayed due to elections in Maharashtra and National Green Tribunal (NGT) orders, which have delayed approvals.
What incentives are developers offering to attract buyers?
Some developers, like Shriram Properties, are offering incentives such as free gifts, including 2.5 kg of silver and an additional 25 g of gold during Dussehra, and an iPhone 16 with every booking across select projects.
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