Sarika Wagnoo, an IT professional in Bengaluru, has been living on rent for the last five years but after enduring two waves of COVID-19 wants to buy an apartment. Her biggest challenge until the beginning of this month was the weekend lockdown in the city which made it impossible for her to go house hunting.
The reduction in conversion rate in some cities is largely on account of fewer walk-ins/site visits by homebuyers due to weekend lockdowns still continuing in some places. Conversion rate is the rate at which homebuyers commit to purchasing a housing unit eventually leading to sales.
Majority of homebuyers plan real estate project site visits on a weekend and spend close to an entire day visiting as many as four sites, depending on the time they take to travel from one site to another. Buyers cannot spend that kind of time during the weekdays as they are working from home.
That’s the reason why weekends are crucial. “Almost 70-80% of closures happen on a weekend. Weekend lockdowns have majorly impacted the conversion rate in some cities. During the two waves of COVID-19, buyers have been shortlisting properties online and focusing on targeted site visits,” Mani Rangarajan, Group COO, Housing.com, Makaan.com and Proptiger.com. told Moneycontrol.
Mumbai and Pune witnessed a high conversion rate after the lifting of the lockdown in June. The weekend lockdown in Bengaluru was lifted only at the beginning of this month. “The first weekend this month saw almost 80% improvement in site visits and we are hoping that by the end of the month the conversion rate would be close to 15% to 20% due to the pent up demand,” Rangarajan explained.
The accumulated demand from April to June is manifesting itself in the city of Benguluru this month but may taper off slightly in August and September when there will be more “window shoppers” rather than serious buyers.
“Right now, buyers are taking faster decisions in Bengaluru leading to a faster conversion rate on account of pent-up demand. A similar trajectory is expected for Uttar Pradesh once the weekend lockdowns are lifted,” Rangarajan said.
Another trend witnessed in Bengaluru has to do with people spending more time on online searches and even closing deals online. “A few plotted developments and apartments by reputed developers were booked entirely online,” Rangarajan said.
According to data shared by DataLabs, PropTiger Research, the conversion rate is down by 25% in Noida and Greater Noida on a quarter-on-quarter basis. Lockdowns were imposed across the country following the second wave of COVID-19. Weekend lockdowns still continue in Uttar Pradesh.
Also, it is observed that conversions in Noida and Greater Noida pegged at 8-10% in the April-June 2021, have been picking up.
Ahmedabad, Chennai, Mumbai and Pune, all saw conversion rate fall by half. Only Gurugram witnessed conversion rate increase by 25%, the data showed.
Gurugram is the only city that witnessed an increase in conversion rate that is nearly 20% of the total site visits. These conversions are mostly recorded in newly launched projects by good, branded developers, an analysis by Proptiger has shown.
"Gurugram witnessed a 25 percent increase on a QoQ basis in homebuyer conversion rate on weekends. Noida and Greater Noida saw a degrowth of 25 percent but conversions that were 8-10 percent in Q2 2021, are gradually picking up," said Ankita Sood, director and head of research, Housing.com, Makaan.com and PropTiger.com.
As far as overall sales are concerned, Delhi NCR was a close second to Mumbai in total home sales in India. Demand remained resilient in Delhi NCR, registering a growth of 50% YoY in Q2 (April-June) 2021. Of the total sales in Delhi NCR, Gurugram had a share of 36% – highest in the agglomeration. The share of overall sales in Noida was at 16% and Greater Noida was at 18%, the data said.
Soon after the advent of the second wave and imposition of lockdowns, conversion rates across Bengaluru, Mumbai and Pune reduced by 30% to 50%. Mumbai and Pune had recorded higher conversion rates in the January-March quarter because of stamp duty cuts offered by the government.
In Chennai and Hyderabad, currently more traction is witnessed for plotted developments. However, this is considered a short-term phenomenon. There has been a significant rise in site visits and walk-ins during the weekends in Chennai, accordingly good conversion is expected in the coming weekends, the data shared by PropTiger said.
“The ‘new normal’ in a world where humankind co-exists with Covid-19 includes periods of lockdown. While in the first wave, it took some time to adapt to the situation and adopt alternative options, the second wave found real estate prepared for the eventuality. Norms and SOPs being followed ensured construction work continued at sites; the supply chain ensured raw material reached sites as per requirements,” explains Niranjan Hiranandani, National president, NAREDCO.
“Shelter is a basic need; the pandemic created a situation where traditional renters and fence sitters turned homebuyers. In a scenario where they could not physically visit project sites or sales offices, the process shifted to the digital platform. It enabled business continuity during travel restrictions, he said.
Virtual platforms displayed site and home layouts for the potential customers, while easing of restrictions helped to close sale deals after a gestation period which stretched a bit longer, he added.
According to Amit Modi, director, ABA Corp and president (elect) Credai Western UP, footfalls are gradually increasing after the complete lockdown was lifted in Uttar Pradesh a few weeks ago. Buyers have started taking faster decisions to buy a house as most of them have made up their minds during the shutdown.
“Also, since launches have reduced, choices too are limited to ready-to-move-in and soon to be completed units,” he adds.
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