“Discounts & offers” by developers in this pandemic
May 13, 2020
The real estate sector in India was on its road to recovery. The last few quarters witnessed immense growth through increased NRI investments and a rise in the demand for commercial spaces. The demand and supply ratio was getting closer to reach the equilibrium, and experts were predicting a massive boom in the sector in the coming years. But all the predictions and expectations were rotted when the new year came along with an unexpected twist. Covid-19 pandemic has forced the world to shut down. The majority of the nations are going through a lockdown to prevent the incurable disease that has claimed so many lives. To ease the load on medical infrastructure, people have been asked to stay safe by sitting at home. The contagious virus has canceled every mass interaction, and hence companies are forced to function from home, whereas schools and colleges are shut down for an unprecedented time period.
All the measures and precautions taken to protect the people from the pandemic has caused a sudden pause for every sector. One of the significant contributors to the economy, the real estate sector is also going through the worst phase after witnessing the rays of hopes to get back on track. With a nationwide lockdown, construction activities have been stopped, laborers are moving back to their native place, and homebuyers are facing the dilemma of whether to buy the under-construction property or not. The crash in stock markets and the massive downfall in the global economy have led people to re-think their budget allowances and priorities.To tackle these difficult times, real estate developers are moving to their all-time favorable schemes – the discounts and offers on properties to lure the buyers. The discounts and offers were proposed to repose the pressure of unsold inventories. Also, the unsold inventories will be liable to the imposed tax on unsold inventories in the next two years. So, it is in the best interest of both the stakeholders and developers to sell as many units to avoid the liquidity crunch again.
The only and major difference is the discounts offered are due to fewer sales in view of the pandemic, rather than achieving the targets by maximizing sales in the festive season. The homebuyers are not allowed to visit from site to site in search of a perfect place due to the pandemic but developers are making sure to provide them with a live on-site view through technology. The discounts and offers will elicit people to make new investments and purchases, which developers and builders look to benefit on. These offers and discounts are competitive and unique in accordance with the target market.
The Reserve Bank of India along with the Central Government has announced various preventive measures and reliefs to boost liquidity in the sector. The three-month moratorium and tax waivers have provided a wave of relief among the developers and the users. The real estate developers are also showering the offers like no EMI until possession, cash discount, free registration and stamp duty, GST waivers, free modular kitchen, free car-parking, iPhones to cars, club membership, registration & stamp duty among others to attract homebuyers back to the market.
The current situation in view of the pandemic along with the additional offers will lead to a 10 to 15% downfall in the prices in the real estate sector. Some experts are even predicting for 20%. So, this can be a perfect time for buyers and investors to invest in property. The increase in e-commerce will also lead to an increased demand for warehousing. The growth in industrial and logistics real estate will also attract many investors in the near future.
The developers are also asking the state governments to waive off stamp duty to revive demands and the extension of relaxation in the classification of NPA norms to 180 days from 90 days. The relaxations from the government will aid the developers in the process of selling the unsold inventories and to avoid liquidity crunch.