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A festive season briefing for homebuyers: JLL


The following is the report by Anuj Puri, Chairman & Country Head, JLL India.

As we look at how the residential real estate market is behaving this festive season, developers and the consultants are on the same page while accepting that it continues to go through a slow time. Many developers still have their backs against the wall financially, and have been challenged to complete or show convincing progress on their under-construction projects.

Unfortunately, fact this has been overly hyped by the media, and even developers who are well capitalized and fully able to complete their projects have been tarred by the negativity brush. This has resulted in a drop in overall confidence from buyers, who are worried that they will commit their money into properties which will not be delivered on time.

Economic signals

The economy has not shown the kind of perk-up which everyone had hoped for. However, matters have definitely improved over what we were seeing this time last year. All in all, the market’s outlook is improving. The RBI’s recent interest rate cut has helped improve sentiment, which is an important driver on the real estate market.


With this rate cut, the RBI sent an important signal to the market that inflation is under control, and that it is confident about economic growth. Such signals definitely have a positive effect on buyer sentiment. However, in terms of actual pertinence on property purchase, the impact may not be very significant – especially in expensive inner city areas in cities like Mumbai. If property prices are in any case unaffordable, a marginal reduction in the cost of borrowing will not make a difference. The reduction in interest rates will have a bigger impact on buying behaviour in less expensive markets, such as peripheral locations of the larger cities and tier 2 / tier 3 cities.

Pricing and correction outlook

In the last four quarters, the prices in Mumbai increased by 3.7 pc, prices in Chennai increased by 1.5 pc and no change recorded in the prices of Delhi-NCR. This presents a more or less stable scenario, which is likely to continue for another two or three quarters. Though many fence-sitting buyers have been waiting for real estate prices to correct, it is unlikely that any large-scale ‘shock disruption’ is imminent.

Corrections are very location-specific as well as developer- specific, and will happen where nothing else will work to encourage buyer activity. In cities and locations where there is still sufficient demand and prices are more or less affordable, there will be no correction, while they will certainly happen in areas where affordability is a deterrent to buyer sentiment.

However, much is already happening to make real estate more affordable. Across cities, developers have been actively re-configuring their projects to align with market demand, in the process saving on costs and passing on the benefit to buyers. Also, a majority of the new housing project launches have been at lower rates than those of earlier projects launched in the same locations in such category projects.


NRI investment action

If we take a step back from domestic real estate consumption and look at demand coming from across our borders, the outlook looks very upbeat. Currently, non-resident Indians (NRIs) are extremely active in investing into Indian real estate. In fact, NRIs are among the top five investor communities in the country’s property sector. Apart from their natural affinity to India and the fact that NRIs see a higher intrinsic value on Indian real estate over property owned elsewhere, purchase decisions are also being spurred by the Indian rupee’s ongoing weakness against the US dollar.

To Summarize

It is at best a mixed bag of market readings this festive season – but is it a good time to buy? Definitely, considering that buyers have never been more spoiled for choice – and, for that matter, bargaining power. Also, we are seeing hard discounts as well as offers to waive stamp duty and registration charges, VAT, service tax and floor rise premium – all of which translate into an actual saving on the cost of the property. More than in many of the preceding years, this festive season is an ideal time to zero in on the best deal and make that dream home a reality.