Developers ramp up marketing efforts and sweeten deals to lock in overseas buyers
Indian developers are going the extra mile to woo expatriate Indians from the GCC and elsewhere. The Indian government’s decision to go in for a demonetisation programme on November 8, 2016 is having a wide-reaching impact on the country’s property market.
The big developers in Tier 1 cities are ramping up their marketing efforts to woo non-resident Indians in the Gulf and the Indian diaspora across the world. Incentives are being offered galore as developers vie to attract a shrinking customer pool.
The Lodha Group, for instance, is inviting NRIs to property tours in Mumbai and sweetening the deal by offering a one-night stay in a five-star hotel and chauffeur service for viewings.
The group is also offering gold vouchers worth up to Dh14,500 (INR270,000) to those deciding to purchase at this time. The offer is valid until January 15. The developer already claims to have confirmations from visiting NRIs.
The offer is valid across all its properties in Mumbai and Hyderabad. These include Lodha Altamount, Lodha Venezia in Parel, The World Towers (one of the tallest residential towers in the world), Trump Tower, The Park in Worli, Lodha Fiorenza in Goregaon, New Cuffe Parade off the Eastern Freeway in Mumbai, Lodha Meridian in Hyderabad, and Amara and Lodha Luxuria in Thane.
However, contrary to perceptions that demonetisation has taken the wind out of Indian real estate companies, the Lodha Group has welcomed the currency reform.
“The Prime Minister said the demonetisation drive would push banks to cut lending rates significantly. This move will subsequently improve liquidity and lower interest rates by one per cent to 1.5 per cent in the next 12 months. With this, EMIs will also reduce by almost 12 per cent, signalling consumers to buy soon before demand and prices for housing move up. All these factors will have a spiralling effect on the ability of consumers to buy homes and an impetus to real estate demand,” said Abhishek Lodha, managing director, Lodha Group.
The scrapping of high-value currency notes is mostly expected to hit smaller companies from the unorganised sector in the medium term.
“In the long run, professional and well-organised companies in the real estate sector will significantly benefit from this move and the scourge of black money and corruption will eventually vanish from the sector. This is a win-win situation for both consumers and investors as transparency will increase and risks will reduce substantially over the next six to 12 months,” Lodha added.
Meanwhile, JLL revealed that a higher number of units were sold every quarter (Q1 to Q3 2016) than new project launches in the same period. This was true across India in 2016, according to the property consultancy.
“Given that old currency notes are no longer valid, home buyers/investors using unaccounted wealth to carry out transactions in cash are facing a tough time, and developers accepting cash components are facing a higher liquidity crunch than those accepting all payments through cheque/bank transfer,” said Anuj Puri, chairman and country head, JLL India.
A slowing number of new launches helped reduce the inventory overhang in India. However, the three biggest markets in terms of volumes of unsold units (including under-construction) are NCR (National Capital Region), Mumbai and Bengaluru.
“In Mumbai, the percentage is higher, but if we discount the longer timelines it takes for large projects to complete, it would fall under five per cent. There are many large projects, high-rises, slum rehabilitation and other redevelopment projects that take a longer time to get completed, prolonging the overall project timelines in the city,” concluded Puri.