During the festive season in the midst of the COVID-19 pandemic, homebuyers can look forward to a wide range of freebies such as stamp duty and GST waivers and schemes that include the property swap option. Developers can hope to see sales recover after a lull of six months on the back of pent up demand.
The upcoming season may also turn out to be a great buying opportunity for fence-sitters scouting for deals and NRIs. Interest rates have fallen and there is a massive supply of affordable and mid-income housing across top cities.
Homebuyers today prefer going in for a ready-to-move-in property and demand in this segment may be high this season. Some buyers may also be considering an upgrade with the pandemic necessitating the need for spacious and bigger homes on account of work-from-home.
Cash discounts, lower interest rates, free accessories, GST and stamp duty waivers not to mention free maintenance – builders are leaving no stone unturned to attract homebuyers this season.
“COVID-19 has accelerated the need and importance of owned homes for a generation that was tilting towards renting over buying. The coming quarter will be a great buying opportunity for fence-sitters, quick-decision makers, and another customer segment that can yield returns are NRIs,” said Chaitanya Seth, partner - Business Consulting – Real estate sector, EY India.
One big shift in the strategy of customer engagement is the extensive use of digital marketing and digital engagement tools by the developers to improve the scale, outreach, and, eventually sales. As against last year, the need for bigger and safe spaces, better amenities like large open spaces, having a co-work space in the project, flexible payment plans, and festive offers are going to be the demand drivers, he said.
"Keeping in sync with the requirement of our customers, we have rolled out exciting offers this festive season across all our residential projects in Mumbai. Under these offers, We have introduced an annual rental payback scheme of upto 4 percent across all our projects in the MMR Region. Furthermore, we are offering zero per cent charge on stamp duty," said Gaurav Sawhney, president, sales and marketing, Piramal Realty.
Homebuyers looking to buy a house this Navratri should understand that today’s market is a buyer’s market. Not only are developers offering deals and discounts, buyers are in a great position to bargain hard and gain significantly. Discounts could vary from 5 percent to even 15 percent.
Pankaj Kapoor, founder and Managing Director, Liases Foras, said builders are under pressure to sell and would have to generate cash flows through customer advances. In that respect, he feels this Diwali is not a sellers Diwali but a homebuyers' Diwali.So, what's on offer this festive season?
are being offered on the per square feet price. For instance, on the brochure rate of Rs 4,000/sq ft, a cash discount of Rs 200 is offered. On a 1,000 sq ft apartment, this works out to Rs 2 lakh.
Freebies such as air conditioners, television sets, furniture, modular kitchens, zero maintenance and club membership, gold coins and IPhones are also being offered.
A GST waiver is also being offered by developers. At present, GST is charged at five percent for residential units outside the affordable housing segment. At the time of registration, the buyer has to pay stamp duty and registration charges.
Stamp duty waiver: While stamp duty varies from 3-10 percent depending on the state, registration charges work out to 1.1 percent on a property worth over Rs 25 lakh.
The Maharashtra government has decided to temporarily reduce stamp duty on housing units from 5 percent to 2 percent until December 31, 2020, to boost the stagnant real estate market hit by the COVID-19 pandemic. Stamp duty from January 1, 2021, until March 31, 2021, will be 3 percent. Along with GST, many developers are waiving off stamp duty and registration charges, which mean further savings for the buyer.
Other schemes on offer include possession-linked payment plans where the customer pays just 10 percent now and nothing for the next two years. Some developers are offering a cash discount of Rs 6.9 lakh and no GST impact of Rs 4.09 lakh. Some projects are offering an assured rent of Rs 25,000 per month for a year.
Mumbai-based Kalpataru Limited has launched a bank subvention scheme where the customer pays just 10 percent now and nothing for the next two years. The realty major is also offering zero stamp duty burden for customers on select projects.
Bullmen Realty India, a Noida headquartered consultancy firm, is offering a product called Bullmen Shield.
“Under the scheme, Bullmen Realty will protect the buyers' funds and double their stuck amount in case of non- delivery of projects by developers,” said Ankush Jain, MD, Bullmen Realty India.
Gaur World SmartStreet’s 'Mauke pe Chauka' is offering a payment plan with 10 percent down payment within 30 days, 40 percent within one year, and the rest 50 percent at the time of delivery. Gaurs Group is running a campaign called Festival Offer 2020 which includes nine gifts for Gaur Siddhartham and Gaur City (14TH Avenue and 7th Avenue).
Bhutani Group is offering a 50:25:25 plan on all their commercial projects in Noida -- Grantham (Sector 1, Greater Noida West), Cyberthum (Sector 140A, Noida) and Alphathum (Sector 90, Noida). The group is expecting revenue of Rs 1000 crore during the festival season.
Mumbai’s Spenta Corporation is offering savings of upto Rs 5 lakh, assured rentals of upto Rs 70,000 per month and an Iphone XI Pro on every spot booking for their project Altavista located in Chembur.
Mumbai-based House of Hiranandani has on offer rentals for two years for any apartment purchased in Bengaluru, consumer durables, home furnishings for its project in Chennai.
“The inclination of Indians to invest in tangible assets during such auspicious occasion is another key-driver we are betting on. We saw a great response to our project launch during the lockdown and clocked sales worth Rs 50 crore in the pre-launch period itself. Overall, we expect a 20 percent rise in demand in luxury housing and are looking forward to a positive festive season, said Ram Raheja, director, S Raheja Realty.
Swap your property this Diwali
But what takes the cake are the property swap schemes. In these COVID-19 times, a few brokerage firms and developers have launched property swap schemes to help homebuyers and investors stuck with projects for years to exchange their residential or commercial properties with a ready-to-move-in project through contract restructuring.
The property swap schemes are being marketed as customer-focused and customer-friendly options with a view to help customers make good their dead investments in housing projects that have been facing inordinate delays in completion.
Brokerage firm Investor Clinic, claims that the scheme, called Mission Azadi, is a win-win for both parties as they offer a quick exit to both the stuck homebuyers as well as developers strapped for cashflows.
"Customers facing issues with undelivered projects can upgrade their property through contract restructuring. We have partnered with five builders in NCR with over 10 projects in their kitty which makes it around 40 completed commercial and residential projects in all. These include developers such as M3M, Migsun Group, Supertech, Bhutani Group and Home and Soul," says Katyal.What should homebuyers keep in mind?
If a homebuyer is being offered a freebie that he already owns or does not need, he can opt for other discounts. For instance, if a developer has offered ACs in two rooms and a hall in a 2BHK apartment, one can instead seek a reduction of a lakh from the total outgo. Buyers should get a fix on how these freebies translate monetarily.
Homebuyers should also understand that there has been a slump in the market. Huge unsold inventory and the ongoing pandemic has forced firms to not increase their rates. As a result, prices are trading sideways. With fewer launches, the market is ready for homebuyers willing to buy.
Implementation of RERA ensures timely completion. While ready-to-move-in properties are safe bets, picking up a property in one of the under-construction projects can also be a good choice.
Also remember that it makes sense to buy residential property only if it is for self-use but not for investment purpose. This is not the time to hope for immediate capital gains. If you are thinking of buying a residential property to make a fast buck, forget it! No appreciation is expected in the next two years. Also, do not invest in places that are touted as future locations.
However, if you still want to make some money, you may consider putting in money in commercial properties. “There is traction in the market for income producing, already leased commercial properties,” says Anckur Srivasttava of GenReal Advisers.
“Evaluate festive offers and freebies on their intrinsic value to you, rather than their flashiness. You may not really need a gold coin, probably already own a decent car, and a family holiday abroad may not make much sense if you would rather stay put and focus on your career for now.
"However, a free parking space, waived stamp duty and registration fees and maintenance-free periods do add to your savings, and therefore to the value of the deal. Air conditioners, modular kitchens and furnishing are also expenses you may incur on the property sooner or later, so getting them free now add real value, as well,” says Anuj Puri, Chairman – Anarock Property Consultants.
Despite spiralling COVID-19 cases, housing sales are expected to witness a 35 percent jump this festive season quarter from October to December against the July to September period, fresh data from Anarock Property consultants has indicated.
The years 2016 and 2017 were a marked contrast - festive quarter sales in these years actually reduced against the preceding quarter, mainly because of structural reforms including Demo, RERA and GST.