Will government light Indian housing sector's festive lamp?

The Indian festive season, ushered in by Ganesh Chaturthi, has begun and investment decisions are being made.

For homebuyers, this period is both auspicious and opportune to buy homes because real estate developers inevitably roll out attractive incentives - either in the form of price reductions, money-saving opportunities like waived stamp duty and registration charges, or 'white goods' like furnishing and household electronics - to attract genuine buyers.

This year, the government has already done a lot of the heavy lifting when it comes to sweetening the deal for homebuyers. These measures alone will result in housing sales increasing by between 5-7 per cent in Q4 2019.

So far, the policy-induced impetus will primarily attract end-users - buyers looking to purchase homes for their personal use.

The government is expected to come up with additional exclusive measures for the real estate sector – expected anytime soon – then it could boost the confidence of investors too.

Festive Deals – What's on Offer?

India is a highly diverse real estate marketplace - consequently, what works in some cities doesn't necessarily work equally well in others.

Each of India's top real estate markets has its own trends for developers seeking to harness tradition-fuelled homebuyer sentiment:

♦    MMR: This key region currently has unsold inventory to the tune of 2.24 lakh units collectively worth INR 2.54 lakh crores.

One of the most popular festive offers in MMR is waiving off of GST and stamp duty and registration charges - top on the list of developers. This effectively amounts to a direct discount of between 5-12% of the overall property cost.

♦     NCR: With more than 1.18 housing units collectively worth INR 82,200 crores completely stalled in NCR.

The developers are doling out discounts by way of GST and stamp duty/registration charges waivers and some are even topping it up with free car parking, clubhouse membership and miscellaneous gifts like modular kitchens.

♦    Bengaluru: India's Infotech capital currently sits on 64,680 unsold housing units cumulatively worth INR 47,780 crores.

Developers offer either up-front cash discounts or flexible payment options.

♦    Hyderabad: With unsold housing inventory of 25,130 units valued at Rs. 16,420 crores, the deals sweetening Hyderabad's residential market this festive season include direct cash discounts, flexi-payment options and rental assurance once the project is completed.

Awaiting A Brighter Spark

This is a government which prefers to detoxify and build the country's economic immunity and strength rather than infusing temporary energy bursts via 'fiscal steroids'.

Given this approach, it is perhaps unrealistic for the real estate sector to expect a policy windfall this festive season. What the sector can reasonably expect in the immediate future are:

♦    The creation of stress asset funds to complete stalled projects

♦    A more democratic taxation approach to under-construction and ready-to-move properties

While the festive season is both auspicious and opportune for such interventions, they really cannot come soon enough for India's struggling housing industry.

– The author is the chairman of Anarock Property Consultants