The Hindu Business Line : Signs of revival in resale market

As the residential real estate market in Kolkata has started to send out signals of a revival, it is the resale segment that is leading the way, according to experts and developers.

The resale of used flats picks up first in any upturn, they say, as the first wave of reviving demand comes from the real-time end users looking to move in immediately. While the overall investment orientation in the real estate sector is beginning to turn positive, lack of confidence about timely completion of projects is prompting buyers to go for a resale unit even at a higher price compared to those under construction.

The unorganised middle-income level resale market is, however, witnessing considerable amount of negotiations being worked out between buyers and sellers, according to local realty brokers. “The unique selling point of used houses over projects under construction in a difficult market condition is the ‘feel and touch’ factor,” Mr Lakhshmi Narayanan, President and CEO of realty broking firm REBI, said.

First-time house buyers have already delayed their investment plans to tide over the downturn and may not prefer to wait till the completion of new projects, he pointed out. However, projects just launched or nearing completion were likely to pick up, he said, adding that the prospective buyers could also capitalise on distress selling. “The demand for used houses is likely to see a 25-30 per cent growth, irrespective of market conditions, this year,” he said.

A local property broker operating in the unorganised market in Kolkata said: “Faced by pressure from buyers, we are now negotiating with sellers to reduce prices lower than their earlier perceived realisations.”

The price of an old private flat in most areas is lower by 15-25 per cent compared to new branded projects. “I closed a deal of an old 1,000 sq.ft flat near Dhakuria recently at Rs 18 lakh, which was earlier pegged at Rs 22 lakh,” he said.

Mr Rahul Todi, MD of Shrachi Developers, said the pricing situation was just the reverse in case of organised realty market. “Buyers are now ready to pay a 10-15 per cent premium to get a ready-to-use flat in comparison to projects under construction.”

Units in a recently launched project of the company in Rajarhat, which were selling at Rs 1,500 a sq.ft two years ago, were now being resold at over Rs 3,000 compared to Rs 2,700 for an upcoming project in the area, he said.

The realty prices in Rajarhat area had gone up to nearly Rs 4,000 per sq.ft before the slowdown.

“While some resale was also happening in December, at a time when the primary market was down, it is indeed picking up now,” Mr Todi said.

While Shrachi does not do any broking activity in the resale process, it is a good sign for the overall revival process of the sector, he added.

Mr Harshvardhan Neotia, Chairman of Ambuja Realty, said, “Most buyers are now genuine users looking to occupy a flat fast.” The company has been experiencing higher enquiries and more closures for both resale and new projects over the last month, he said, adding that the residents of Ambuja projects occasionally come to the developer for selling flats.

The initial panic of buyers has started to recede with the economy looking up now, he said. Nearly 10 apartments were being resold in one of its old projects over the last couple of months, a company official said.

Organised sector players also commit to investors looking for capital gains about facilitating in resale, a consultant said, adding that such flats are also being pushed for resale now when buying sentiment is reviving.

Mr Mayank Saxena, Associate Director of JLL Meghraj, said, “The first signs of movement are noticed from the high net worth individuals in a reviving market while a bulk of the population misses out on the opportunity (of a price cut and low interest rates).”

While the resale segment was doing better than the primary market during the beginning of the last quarter, the latter is also picking up over the last month as some of the new projects in Rajarhat and other areas are nearing completion.

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