Excessive supply of flats, declining sales, increased Omicron scare, even more alarming UDS and pre-launch sales – all of these together appear to be creating problems in the construction sector. What strategy should developers adopt to overcome these difficult conditions and what some of them are already doing in this regard, remains to be a major concern.
Since the formation of RERA, approvals have been obtained for nearly two lakh flats in Hyderabad. Assuming that 25,000 flats are sold each year, it would take a maximum of eight years to sell this entire stock. However, since four years have already passed, let us assume that one lakh flats have been sold. It will take another four years to sell the rest of the flats. If about 50,000 flats are approved each year, at least another two lakh flats will be added to this long list in the next four years. That is, at least four lakh flats will have to be sold in the next four years. In addition to these, at least one lakh flats were sold under UDS and pre launch sales. Of these, 50,000 flats have been already sold and another 50,000 flats are yet to be sold. In all, at least 4.5 lakh flats should be sold in the next four years which will not be an easy affair.
According to the approvals given so far by the RERA Authority, it would take four years to sell the existing one lakh flats. The number of sellers under UDS and pre-launch schemes also increased. They have at least 50,000 to be sold. As a result, around 1.5 lakh flats should be sold. On the other hand, the Omicron variant is spreading fear. Cases are already on the rise in Western countries such as the US and UK. We expect the number of cases to increase in January and February. Moreover, many States have already stopped New Year and other festive celebrations. Some States are also imposing night curfews. Against this backdrop, home buyers are likely to back down a bit in the coming days due to fear of Omicron.
In Hyderabad, several construction companies have been selling flats at a discount of Rs 100 to Rs 250 per sq.ft, depending on the situation since last month. Primarily, price reductions appear to be high in Western Hyderabad. However, in the new projects, many national companies are selling flats at lower rates. Take Prestige Group for example. The company recently announced a project called Beverly Hills at Kokapet and is selling flats at Rs 6,600 per sq.ft under the Early Bird offer. This project, which has been approved by RERA, could save Rs 10 lakh for home buyers. However, many realtors are of the opinion that the company was quoting a price higher than that in the locality and then reducing it in an attempt to attract buyers. But one must observe that the price cut by a reputed company like Prestige sends a strong message. More and more real estate companies are moving in the same direction and reducing prices of flats, if buyers are coming forward. The construction companies feel that the situation could get worse in future, if the rates are not reduced
