The coronavirus pandemic led developers to offer price discounts across projects in eight major cities to boost sales. As many as 44 percent projects offered discounts such as cash, GST, stamp duty, car parking waivers and subvention schemes, a new report has said.
Out of the 13,428 projects assessed by Liases Foras for its report titled Residential Real Estate Market Report – Tier 1 cities Q1 2020-2021, the weighted average price across Tier I cities have reduced by 4 percent since March 2020. NCR exhibited the maximum decrease in prices by 9 percent while it was a decrease of 4 percent in Bengaluru, Chennai, MMR and Pune.
The parameters considered for calculating the discount included quarterly change in builder quoted prices, discount on account of GST rebate, stamp duty/registration fee waiver, cash discounts, online booking discounts, free commodities like a gold coin, modular kitchen, car parking, white goods and discount on account of subvention schemes.
The discounted prices were estimated considering the impact of discounts and schemes developers offered during this quarter. Around 44 percent projects offered discounts such as cash discounts, GST, stamp duty, car parking waiver and subvention schemes. Out of the 13,428 projects considered across the eight cities, 8,860 were checked for discounts of which 6,046 projects did offer schemes, the report said.
In MMR, as many as 1,712 projects offered discounts followed by Bengaluru with 1,008 projects. In Delhi-NCR only 335 projects offered discounted schemes, the report noted.
“Covid-19 has started showing its impact. The reduction in sales and extensive inventory has forced developers to consider offering discounts and schemes which has led to city-level prices reducing by 4 percent on a quarter-on-quarter basis and 5.4 percent year-on-year basis. We have seen discounts in the range from 5 percent to 20 percent,” Pankaj Kapoor, Founder and Managing Director, Liases Foras, told Moneycontrol.
These discounts are expected to continue beyond the festive season.
“We will see builders doling out more discounts and freebies during the festive season which will lead to a further price reduction. Discounts are expected to continue as inventory and debts have started piling up and will be way too high for builders to hold,” he added.
As for sales, the report noted that Tier I cities recorded sales of only 26,379 units in June quarter (Q1 FY 20-21), a 59 percent drop from March quarter when the sales were 63,992 units. Sales witnessed the maximum drop in Bengaluru by 64 percent followed by MMR by 62 percent, Ahmedabad by 61 percent and NCR by 60 percent.
Unsold units decreased by 3 percent on a quarter-on-quarter basis and the current unsold across top 8 cities stands at 960,992 units. It decreased across the cities despite the low sales due to fewer new launches.
The unsold stock decreased maximum in Hyderabad (5%) followed by Pune (4%), Bengaluru (3%) and Kolkata (3%).
The months’ inventory shot up by 136 percent across Tier I cities and is touched 109 months in June-20. The inventory overhang in Chennai and MMR was the highest among the tier 1 cities at 162 and 137 months respectively followed by NCR with 135 months.
In Mumbai, the quarter-on-quarter sales decreased in all the suburbs with maximum reduction in New Mumbai by 82 percent followed by Central Suburb and Island city each by 68 percent, Panvel (66%), Western Suburb Extended (62%), Western Suburb (59%), Central Suburb Extended (58%) and Thane (43%), the report said.
Unsold stock in Mumbai reduced by 6 percent in Central Suburb Extended, 2 percent each in Western Suburb and Western Suburb Extended. • Unsold Stock reduced marginally in Island City, Central Suburb, Thane, New Mumbai and Panvel, it said.
In Delhi-NCR, the quarter-on-quarter sales decreased by 60 percent when the maximum drop was witnessed in Gurugram by 71 percent followed by Faridabad (65%), Bhiwadi (61%), Ghaziabad (56%), Noida (51%) and Greater Noida (49%).
The unsold stock reduced in all suburbs with Faridabad witnessing the highest drop of 4 percent.