Hoping for a turnaround, realty brokers bet big on Narendra Modi government

Since the election results were announced last week — handing out a clear mandate to the Narendra Modi-led BJP — real estate brokers across the country have been prodding buyers to book their dream homes fast, since with a stable government on the cards, builders could increase prices any time soon.

Business for thousands of brokers has been thin over the last year or so as negative sentiment engulfed the market and home sales tanked. Investors fled and genuine home buyers waited anxiously to see if a new stable government can infuse life into the economy.

“It might just be a case of brokers trying to perk up the market, riding on sentiments,” says Samir Jasuja, managing director of property research firm PropEquity.

Developers and industry experts say property prices are likely to remain stable, at least for the next few months till the industry measures up the new government’s policy and reform initiatives, which is good news for buyers. Developers are hoping that the new government would hasten the pace of granting approvals to projects and also get the Real Estate Regulation and Development Bill, which has been hanging fire for many months, passed.

“There’s abundant supply in the market and lots of options for buyers. But no immediate price increase is in the offing,” says Getambar Anand, managing director of ATS Infrastructure and also the president of the Confederation of Real Estate Developers Association of India (Credai).

Jasuja of PropEquity says prices will take some time to go up. “It won’t be a knee-jerk reaction from developers.”

With slowing home sales over the last year and a half, developers have been facing a liquidity crunch. Unsold inventory levels have risen dramatically. According to property research firm Liases Foras, in the December quarter, unsold inventory levels rose to about 650,000 apartments, which would take over 30 months to be sold. That number went up to 700,000 by the end of March 2014.

Selling off this huge number of unsold homes will be priority for developers, says Abhay Khemka of Gurgaon-based real estate brokerage firm Khemka Investments and Properties.

While there’s been no rush to buy homes, brokers are starting to get calls from end-users and investors alike. Khemka says he has heard from five of his investor clients in Gurgaon over the weekend.

“While some brokers might be trying to force the issue to increase their business, buyers also realise that developers are under stress. Those who have the money and can buy are starting to explore the market as sentiment improves,” he says.

Many buyers have been sitting on the fence for the past few quarters because of negativity in the market — a slow economy, nagging inflation, political uncertainty, a not-too-encouraging job scenario across sectors, high cost of homes and rising home loans. Now, with the stock market on the rise and the rupee strengthening, these fence sitters are also getting positive vibes.