The Truth Behind The Indian Festive Season Property Boom: Arvind Jain, Managing Director – Pride Group

arvind jain - desk1It is commonly believed that the Indian festive season induces property purchase solely because religious sentiments are high during this period. Likewise, it is a commonly accepted notion that the attractive schemes and freebies that Indian developers offer during the festive season have something to do with the increased sales. Apart from and creating an unduly negative impression in the eyes of global observers of Indian markets, such an assumption does not give Indians the benefit of intelligence.
The Indian festive season stands for prosperity, but if there are no signals of prosperity from the country’s economy, nothing can induce aspiring home buyers to take the plunge. For that matter, all kinds of investments are put on hold if the economy is in poor shape. In a depressed economic scenario, neither freebies nor religious sentiment can make a difference.
It is a well-known fact that the state of the country’s economy is reflected in how its real estate market is performing. Real estate investment requires considerable financial outlay. Even if it is purchased via a bank loan, one still has to make one’s own contribution towards the cost of a home. In a situation where one is doubtful of the immediate financial future and one’s ability to tackle all the important expenses of running a family, investment into property is out of the question. Neither religious ‘muhurats’ nor tempting offers by developers will make a difference to such caution.
The festive season can only have a positive impact on real estate sales if financial confidence has returned to a sufficient degree. This is when people feel safe to get out of their cautious mode and look at property investment and other methods of investment again. In this respect, the importance of renewed health in the overall economy cannot be over-emphasized.
The festive season in 2013 saw less than 13% rise in property purchases in Indian cities, regardless of whether they were metros or tier 2 towns. Ultra-luxury homes saw marginally better traction, largely because buyers in this segment tend to use their own funds and do not rely on home loans. In fact, the generally depressed real estate market sentiment gave luxury home buyers considerable negotiation leverage with developers. Cities like Mumbai, Pune, Bangalore and Chennai offered some excellent bargains on luxury homes in this period.
In contrast, serious inquiries and sales have already increased by 22% in cities like Mumbai, Pune and Bangalore during this year’s festive season. Again, this has nothing to do with religious dates or freebies on offer and is actually the result of the return of financial confidence. While people do prefer to buy homes on auspicious dates and are happy to take the benefit of sensible add-on offers, actual home purchases take place on the basis of available liquidity, investment appetite and confident financial projection.
For the rest of 2014, the signals remain favourable for a continuing upward trend in residential property absorption. The country’s GDP has breached the 5.7% mark for the first time in two years, and a recent survey conducted by VISA indicates that over 60% of Indians with disposable income are once again planning on increased discretionary spending. The newly incumbent Government has delivered on its promise of ‘Acche Din’ ahead, and real estate market sentiment is once again on the ascendant.
With home ownership still being the highest investment priority for Indians, increased home buying during the remaining part of the festive season will peak at around 28% over sales charted in the same period last year. Also, the additional sales momentum will maintain at a steady 20-22% even after the festive season is over. To the market, this is a clear signal for increases in property prices, which means that real estate investments made during the current festival period will see much healthier capital appreciation than seen in the previous 2-3 years.
About The Author
Arvind Jain is Managing Director of The Pride Group, a world-class property development conglomerate that is changing the cityscapes of Pune, Mumbai and Bangalore. Established in 1996, The Pride Group has built and delivered over 10 million sq.ft. of constructed area. Pride Group is currently developing a 400+ acre mega-township in Charoli, Pune.
For more information on Pride Group, please visit www.pridegroup.net