Prospective buyer Arun Mitra had been thinking of buying a second-hand flat since February. Following the downturn, he was sceptical about timely completion of projects under construction. Even the bank he approached for a home loan had then given him the impression that it was keen on lending towards a completed project rather than one under development. Five months down the line, he has changed his mind and booked a flat in a project under construction in Rajarhat.
Homebuyers in Kolkata are slowly but steadily regaining their confidence in green-field and brown-field housing projects, according to developers and industry experts.
“Between January and June this year, nearly 60-70 per cent of the transactions we registered were in the ready-to-move-in properties and resale flats. The trend has now shifted towards projects under construction with nearly 90 per cent of the bookings being done in the segment,” Mr Mayank Saxena, Associate Director, Jones Lang La Selle Meghraj, Kolkata, said.
The initial trend of higher demand for ready-to-move-in flats is natural, he said, as resale of used flats picks up first in any upturn. The first wave of reviving demand comes from end-users looking to move in immediately, he pointed out.
At a mature stage of the recovery, however, upcoming projects exert appeal. “The trend of demand during a recovery moves from resale houses to brown-field projects and then to green-field projects,” he said.
Price increase
Indicative of some sort of recovery in projects under construction in Kolkata, some large developers have increased prices of flats recently. The Tata Housing project in Rajarhat has increased prices from Rs 2,700 a sq.ft to about Rs 3,150 over the last three months. “This is mainly because the developer has assured a steady cash flow in the first phase and can now afford to sell slowly at a higher price band for the remaining units,” a real-estate broker said. The size of the flats in the second phase of the project has also been increased by 100 sq.ft, to around 1,400 sq.ft. Unitech too increased the price of flats recently in its Rajarhat Vista project by about Rs 50 per sq.ft.
The prices in some projects in the city were, however, down by about 30 per cent as against the year-ago period, Mr Saxena said, adding that prospective buyers should look at investing before the prices increased further.
Customers prefer wider choice
Customers’ preference for a project under construction might be attributed to wider choice with regard to the layout and position of flats, he observed. Prior declaration of a penalty by developers for a delay in delivery of upcoming projects also helped boost customers’ confidence, he said. The upcoming projects, he pointed out, were at times more optimally priced as the developers used less expensive fittings. For example, smaller vitrified tiles and ceramic varieties may be used in place of large vitrified tiles.
“There is a larger flexibility in payment of loans for projects under construction as the period of payment is stretched over a longer term,” Mr Kumar Shankar Bagchi, Managing Director, Bengal Peerless, said. “In a downturn, banks are keen on extending loans to completed projects as they feel their liquidity is safer in such cases. Efforts by the Centre in recent times to boost lending, lowering of interest rates and the overall revival of the economy have, however, increased bank lending for flats under construction as well,” he added.
It was also difficult to woo customers into making a full down payment by offering discounts, as the rebates (around 5 per cent in case of Bengal Peerless) were much lower than bank deposit rates, Mr Bagchi, pointed out. Faced by considerable demand for its projects under construction in Rajarhat, the company was planning to launch a green field residential project of 1,600 units on E M Bypass, about 50 km from its existing project Avishikta, he said.
Mr Harsh Vardhan Neotia, Chairman, Ambuja Realty, said bookings were going well in both its green field projects — second phase of Uphar near E.M. Bypass and the Ujaas in Lake Town. Flats in Ujaas are priced at Rs 45 lakh and in Uphar between Rs 45 lakh and Rs 1 crore. Both the projects are expected to be completed by March 2011.
Mr Abhijit Das, Joint Managing Director of Kolkata-based real-estate broking firm Lemon Grass Advisory Pvt Ltd, said, “Demand has picked up in upcoming projects in the price band of below Rs 30 lakh and over Rs 70 lakh.”
“One year from now, builders will return to the earlier pricing, and buyers still waiting may miss the bus,” he added.
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