It took just two hours for DLF, the country's largest property developer, to sell all the 1,250 apartments in the second phase of its Capital Greens project near the Moti Nagar area of Shivaji Marg (Najafgarh Road) in West Delhi.
The project was launched on September 23 and the prices were around 25 per cent lower than the prevailing market rates.
In Mumbai, Rustomjee, a prominent private property developer, got bookings for 44 apartments in its Global City project in Virar, a distant suburb of Mumbai, in the first two days of a property exhibition organised by the Maharashtra Chamber of Housing Industry from October 1-4.
The developer has already received bookings for 600 apartments in the Global City and another 200 apartments in Rustomjee Urbania project in Thane, on Mumbai's outskirts, in the last three months, all in the Rs 10 lakh (Rs 1 million) to Rs 50 lakh (Rs 5 million) category.
Another realty firm Nahar Group says it has sold 800 apartments in its Amrit Shakti project in Powai in the last five months. Nahar expects booking for another 15 apartments after MCHI exhibition.
After witnessing a revival of sorts in home sales in the first and second quarters, developers are hoping to cash in on the demand for affordable homes in the third quarter too, due to a large pent-up demand and the general feeling that prices may not go down further.
"Buyers have realised that prices may not go down further and there is no point in waiting now," says a senior State Bank of India executive. SBI's stall at the property exhibition got over 500 enquiries every day during the four-day exhibition and the bank expects a good conversion.
All bankers are also expecting the good run rate on home loan disbursals to continue. ICICI Bank managing director Chanda Kochhar expects a surge in home loan disbursals in the third quarter. "The confidence is coming back due to increased job security and the feeling that real estate prices have corrected enough," she says. There is also a general consensus that interest rates have bottomed out, she says.
JS Augustine, director of marketing at Everest Developers, says there was a huge pent-up demand which is coming into the market now. Buyers who were holding back are now buying. Developers who had pulled back a lot of projects earlier are also launching new projects given the improvement in the market,'' Augustine says.
The period from October 2008-March 2009 was the toughest period for developers when property sales touched lowest levels since 2004. Property prices had fallen over 40 per cent from their peak in 2007-08 as buyers stayed away due to salary cuts and fears of job losses.
But successive interest rate cuts, stimulus packages from the government and overall improvement in economic conditions changed the scenario since April this year with the country's biggest developers, DLF and Unitech, selling over 6,500 units in the first quarter of FY 2010.
"We expect better sales in Q3 and Q4 as well. We have got very good response in Delhi which gives a good value for developers like us,'' says Rajeev Talwar, group executive director of DLF. Even a Unitech spokesperson said the company expects to continue its growth momentum in the coming quarters.
Home loan lenders are naturally bullish. SBI is targeting a growth of 30 per cent in the current quarter against 21 per cent in 2008-09. HDFC, the country's largest home loan provider, saw disbursals rise 22 per cent in first quarter and expects the trend to continue.
Normally, there is a lag of three to six months from the time of purchase and disbursal of loans by a bank or a housing finance firm.
Developers, which have increased prices by 10-15 per cent in the last six months, say this is the best prices buyers can get.
"Prices have bottomed out. We do not see any reason to cut prices further. Though prices will not go up sharply, they will certainly go up slowly in the coming months,'' says Parag Shah, general manager, sales, Nahar Group, which sells apartments in Rs 60 lakh-Rs 75 lakh (Rs 6 million to Rs 7.5 million) in its Powai project.
Apart from launching premium housing projects in the last few months, developers have also withdrawn freebies such as free parking, waiver on stamp duty, free holidays and so on after the spurt in sales.
"Last year there was a recession and sales were sluggish. That is why developers needed to doll out freebies. Now products sell without this," says Nahar's Shah.
But that's precisely why some analysts are concerned. Pankaj Kapoor, chief executive of Liases Foras, a realty research firm, says "there is high demand only in the lower price bracket of Rs 10-20 lakh (Rs 1 million to Rs 2 million).
August and September sales have fallen by 20 to 25 per cent as developers have increased prices again. There is still lukewarm response for premium properties," he says.
Prospective buyers like Govind Chitre, a retired government employee, agrees: "The moment developers see increase in the Sensex, they jack up the prices. They charge on the super built-up area, which is really absurd. I feel there should be a strong regulatory authority to control builders."
