The Indian economy has proved resilient time and time again. Even the pandemic, which was one of the worst disasters in human history, could not completely derail it. However, the recovery has been slower than many expected. And now that we are inching towards the pre-pandemic levels of economic stability, the Russia-Ukraine war has emerged as a major roadblock. The price of most raw materials has shot up, leaving developers with no choice but to pass on the hike to their consumers.
This coupled with the recent slew of repo rate hikes by the RBI will lead to a dip in home buyers' appetite. Given that real estate is the second-largest employment generator in India and is expected to contribute 13% to India’s GDP by 2025, we might be heading to a mild recession in the next 6-8 months.
There are more than 4,80,000 unsold units in the top 7 Indian cities as per RERA and IGR data. Pune contributes more than 9% to this number with 45,000+ unsold units, which, at the present rate, will take another 2 years to sell. And yet, we see new projects being launched regularly.
Developers looking to overcome this situation in Pune must strive to understand the changing customer preferences and tailor their offerings to meet demand. Today, while developers are offering marquee properties at a premium, the consumer has become fiscally conservative and is unwilling to spend as much.
BeyondWalls latest market research in Pune corroborated this fact and unveiled some startling insights:
- Right now, price is the sole decision-making factor behind a purchase.
- Homebuyers are extremely concerned about the lending rates, economic conditions, and construction risks, and are willing to delay their purchase till they get the right deal.
- Even in the present situation, the demand for affordable and mid-segment properties remains steady. 2BHKs in the range of INR 50-60 Lakhs are highly sought after.
- Just 10% of buyers are willing to spend at a premium and even they have fixed budgets and are in no hurry to purchase.
- Mid-segment is the only inventory that will continue to sell even as the rest of the segments remain stagnant over the next 6-8 months (The only exceptions to this will be projects placed at a premium location and with a significant competitive advantage.)
- Customers in the current buying cycle are more inclined towards properties that are ready or nearing possession. They will only choose a new launch if its price benefits them.
These insights make clear the need for the right pricing strategy and that any wrong move will hurt the sale of projects. To avoid real estate sales stagnation, here’s what developers must consider when planning a new project:
- Market demand
- Product-market fit
- Sale velocity of the micro-market in the product segment
- Target buyer’s financial conditions, based on predictive research
- Communication strategy that markets the product to the target audience
Even with all of this as a guiding principle, developers need to leverage data in their decision-making process. They must make informed decisions that are backed by critical metrics and actionable insights. The first step is analyzing the wealth of data that has been accumulated as a result of their digital transformation initiatives. This would help them understand their target customers, sell their inventory, and ride out the next economic slump with relative ease.
Sources:
- Primary market research
- Data from RERA and CREMatrix
- Business Standard (some information but not data)
- IBEF