Time to shop smart

It's the season to drive a hard bargain in the residential real estate sector as desperate builders offer discounts and freebies to clear their inventories.

Rakesh Rai        Print Edition: October 2010

It's a cinch that many of you, especially government employees, are waiting for this year's bonus cheque. Given that some of us missed out on it last year because of the slowdown, this year is likely to be extra special.

Or so we hope. Of course, you're not the only one waiting for it.

Your local builder is also betting on a bonus cheque this festival season. Most developers, still weighed down by a significant unsold inventory, are preparing to go all out to make a sale during the coming months.

The period between October and January accounts for approximately 40% of the annual sales of all residential projects in the country. "As buying a house is mostly a one-time decision, customers prefer a shubh muhurat (auspicious time), boosting transactions in October," says Dilip Singh, a Delhi-based property broker.

"Customers are on a buying spree from October to November as servicemen and government employees get festive bonuses and businessmen book profits. People even sell stocks for capital gains to increase spending during this season," he adds. Of course, not all experts are gung-ho about this period.

"If you look at the profile of most potential buyers, they are individuals who will have to take a home loan to fund the purchase, and for them the festival season doesn't matter," says Anshuman Magazine, CMD, CB Richard Ellis, South Asia, a real estate consultancy. However, he does agree that the season has somehow been built into the system, what with the bonus cheques flowing in and an upbeat mood, which results in developers offering various sops to attract buyers.

This year, potential customers have higher disposable incomes and willingness to spend compared with last year. These factors are likely to lead to heightened activity in the residential real estate market. This is evident from sales in other high-value segments. "Though the revival in the housing space has already begun, given the positive outlook and higher disposable incomes that buyers have this year, we definitely see sales going up strongly," says Rohtas Goel, CMD, Omaxe.

This, for the average buyer, implies a season of discounts and freebies. So, this period will be a good time to bargain for the home that you have been waiting for all through last year.

"As is the case with most things one buys in the market today, the MRP has become meaningless in real estate sector as well. It's what the BPLR was for home loans. The rate was mentioned in the loan document, but almost always one got a loan for less than that," says a Mumbaibased builder, who doesn't want to be identified.

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