Despite festive sales surge in real estate, major discounts are absent, with developers focusing on streamlined payment plans amid steady market demand.
Absence of Festive Discounts: A Shift in Developer Strategy
This festive season, the real estate market in India is witnessing a notable change as developers hold back on the traditional discounts and incentives that were once common. In past years, homebuyers enjoyed upfront discounts of around 5-6% and waived-off charges like stamp duty and GST. However, with robust sales figures and low inventory in affordable and mid-segment categories, developers now seem less inclined to offer these perks, especially outside of the lower-end market.
Some experts noted that while some minor freebies like gold coins or modular kitchens might still be on offer, significant discounts are largely absent across major cities. Developers seem focused on maintaining their profit margins in the face of tepid demand in the mid and affordable housing segments.
Changing Incentive Landscape: Focus on Payment Flexibility
Although discounts are limited, some developers have shifted their approach toward more flexible payment plans to attract buyers. These plans often involve linking payments to construction milestones or offering payment holidays. According to Gundeep Singh, CEO of property tech firm Simplease, this strategy helps developers manage their cash flow while avoiding the high costs associated with holding unsold inventory. This trend highlights a more calculated approach in response to steady demand in the market, even as some segments show signs of slowing down.
Strained Mid-Segment Sales and Declining Margins
The mid and affordable segments, traditionally a focus during festive sales, are experiencing a slowdown. Knight Frank’s research revealed a 13% year-on-year drop in mid-segment sales and a 14% decline in affordable housing sales during the July-September quarter. At the recent NAREDCO Homethon 2024 exhibition in Mumbai, developers were hesitant to offer discounts due to shrinking margins in these categories. They emphasized showcasing the value of their projects rather than cutting prices, as further reductions could jeopardize project viability.
Luxury Segment Outshines Affordable and Mid-Segment
In contrast, the luxury and premium housing markets have performed exceptionally well. Leading real estate players like Godrej Properties and Macrotech Developers have shifted their focus toward the high-end segment, reporting impressive pre-sales figures despite the typically slow July-September period. Godrej Properties recorded bookings worth ₹5,200 crore, a 3% year-on-year increase, while Macrotech Developers posted a 21% rise in pre-sales to ₹4,290 crore. This trend reflects a stronger demand for luxury properties, even as affordable and mid-segment sales struggle to gain momentum.
Developers’ cautious approach to discounts this festive season signals a strategic shift in the real estate market, with a focus on preserving margins and catering to strong demand in the premium segment. As flexible payment plans take the place of traditional incentives, buyers in the affordable and mid-segments may find fewer opportunities to capitalize on festive offers, underscoring the evolving dynamics of India’s property landscape.
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