Ready to move homes review for Indian Real Estate Sector by ANAROCK Property Consultants
Indian real estate developers have shifted focus on ready-to-move homes. A review on ready to move apartments and homes by ANAROCK Property Consultants follows....
The attractive price difference that under-construction homes offered over ready-to-move options has reduced significantly . Without lower prices, under-construction homes lose the only real appeal they ever really had. All considered, the rationale behind the preference for ready-to-move-in homes is hard to argue with.
In India, there are hard numbers to justify this preference.
As per ANAROCK data, nearly 5.76 lakh homes launched in or before 2013 - worth a staggering INR 4,64,300 crore - are stuck in different stages of non-completion in the top 7 cities alone. (Five years is a reasonable time-frame to use as a benchmark as this is the longest it should take to complete a normal housing project.). While other countries do not face such a market malaise, the preference for ready-to-move-in apartments is also a global trend visible in major markets such as the US, UK and many parts of Asia.
Due to advantages such as reduced risk, better access to mortgage and reduced complexity of moving in, ready homes are the go-to option for homebuyers in London, New York, Dubai and most other global cities. Cutting to the chase, buyers want finished products, not products under development. They also want affordable homes, and not just in India. Ready affordable housing is trending even in developed markets.
In New York City, a large section of the ready housing supply falls in this category. In Dubai, the demand for ready apartments endures even in an otherwise slow market. The residential market there is currently flooded with ready apartments.
The preference for ready-to-move homes is not restricted to just one budget segment - it is spread across all price categories, including luxury housing. In the past, the demand for under-construction homes was largely driven by investors with an unwavering 'buy-low-sell-high' outlook. Projects were getting completed, albeit with some delays, but investors were willing to wait and often bought unfinished inventory in bulk.
Today, Indian housing demand is predominantly driven by end-users - actual buyers who intend to live in the homes they purchase, not sell them or rent them out. This is also true in the case of luxury and ultra-luxury housing. Very recently, a realty major announced that it had sold 376 ready-to-move-in luxury apartments in a project in Gurugram - almost 75% of the overall inventory available in the project - on the very first day of its launch.
Such a feat presupposes the three important strengths - execution capability, holding capacity (not needing to monetize projects immediately) and financial clout (the ability to finance projects to completion without relying on advance sales). Most smaller developers relied on the sale of incomplete or even merely announced projects to raise capital to finish them.
We are witnessing an important facet of the consolidation happening in Indian real estate, wherein established players who can actually complete their projects before marketing have a distinct advantage.
Unsold inventory can and does reduce once it gets completed as long as it is in the right locations, is of acceptable construction quality and offers the right amenities. As per ANAROCK research, the end of Q3 2019 saw 6.56 lakh units lying unsold across the top 7 cities, of which nearly 12% - or about 81,300 units - are ready-to-move-in.
Going by the current trends, it is fairly certain which part of this inventory will 'move' first.