Track2Realty Exclusive: The sentiments in the property market are subdued across the country and the transactions have nosedived in most of the major markets. However, Gujarat real estate seems to be picking up to buck the trend otherwise and the sentiments are changing for the better. This is reflective in the transactions that are happening across the state.
If the State Government’s revenue figure is any indication, then the property transaction rate has picked up and is better than the national average. It seems the right property in the right market at the right price point is doing brisk business in Gujarat, even though reports may not reflect it and instead focus on the general macro level outlook.
Facts speak for themselves. The State Government’s income from the stamp duty and registration fee is increasingly scaling up and had actually gone up in 2013 as well even though the year had not gone so well for the sector otherwise due to many factors.
The collections had been in the negative in 2012 largely due to wishful thoughts of a price correction in general and crash in certain select markets. However, the average monthly collection in 2013 compared to 2012 average monthly has been much higher and the trend has been maintaining the momentum till date this year as well.
Some of the analysts tracking the Gujarat property market maintain that the investors and buyers have started investing again as they feel that the market rate will increase soon after Lok Sabha elections. A closer look, however, suggests that not only the wishful and fancy expectations of a price crash has already crashed in the collective consciousness of the buyers, the developers have also woken up to the reality that it is time for prudent fiscal management. Many of them have started restructuring their marketing strategies to offer freebies and discounts.
It is generally believed that even though the property prices are all set to appreciate post the General Elections, disposing off the inventory and going for the new launches makes more business sense than to hold the property and keep paying the interest over loans. This realism is driving the Gujarat real estate market to a new era of creating an equal opportunity market. The buyers are equally conscious of this cost & benefit opportunity that the real estate market is offering as of now.
The policies of the Gujarat Government have equally been responsible for the property market to adopt a pragmatic approach. For example, the State Government’s recent initiative of launching affordable housing schemes made the developers realise that the buyers need to be enticed with the price cut sooner the better. Failing this, these buyers would wait for the government schemes. After the State Government announced several housing schemes for the economically weaker sections, lower income groups and middle income groups, some of the developers even offered discounts up to 30 per cent.
There is a realisation in the Gujarat real estate market that if the next Prime Minister is elected from the State, then many such housing schemes would be coming in near future. Already Ahmedabad Municipal Corporation (AMC), Ahmedabad Urban Development Authority (AUDA) and Gujarat Housing Board (GHB) have received a good response from the prospective buyers. This makes the developers extra cautious to be seen as offering competitive projects at competitive rates to remain relevant to the market.
Manan Choksi, Regional Director, RE/MAX MGM seems to agree with the premise when he says that Gujarat realty market is looking up with healthy transactions and most probable Prime Minister candidate from state is the driving force behind the surge of market. Also, healthy stock market is another driving force. He believes Gujarat property market has just picked up at the right time.
“Yes we can give credit to clean image and progressive policies of the State Government for this positivity in the market. People are bullish about business in Gujarat. It is the market sentiments and progressive policies that are driving the Gujarat real estate, not the discounts and freebies. In my view, discounts and freebies are not affecting the market. I feel it is rather harming the market. Going back to basics is the kind of theme used by successful real estate marketers. Frills no more attract the customer,” says Choksi.
Requesting anonymity, an official of Gujarat Institute of Housing and Estate Developers (GIHED) says that the developers are more focussed now on moving on with projects, even with small margins and even with a price cut. The peer pressure to maintain the price momentum up has not worked for them and this new realism has found many takers among the buyers as well as financial institutions.
The buyers also seem to agree with this business philosophy. “For someone like me buying a mid range apartment even a price cut of Rs. 2 lakhs matter. I immediately gave my consent when the developer offered this lucrative deal. I am conscious of the fact that post the General Elections when the uncertainty with the overall economy will give way to clarity the housing market will be among the first to get the momentum. So, in Gujarat property market it is like take it at the lowest level or leave it to repent later,” says Rakshit Shah, a home buyer in Ahmedabad.
Analysts believe it is the buyers like Rakshit who are the prime demand drivers in Gujarat property market today since they understand the dynamics of property market and are conscious of the overall macro economy. They are the buyers who know that the kind of deals that are available today in the property market would not be available after a couple of months. This is what is changing the gloomy outlook to positivity in the market.
Real estate, after all, is a game of sentiments and more than economic outlook, more than interest rates and more than discounts & freebies what brings the buyers to the market is a kind of positive sentiments that may or may not have a direct bearing with the fundamentals that drive or doom the property market.
As of now, these sentiments are bullish even though market fundamentals may need time to correct. That also indicates the resilience of the Gujarat property market. Once the basic fundamentals are in place post the General Elections, this positive buyers’ sentiments may take Gujarat real estate to a new high. After all, the sentiments have started picking up at the right time.
