Impact of Economic Slowdown on Real Estate
The real estate sector is grappling with multiple challenges, including declining sales, elevated interest rates, limited funding availability, and a global economic slowdown. This confluence of factors has led to a sudden slump in demand and negatively impacted real estate stocks.
Marketing Strategies Fail to Attract Buyers
Various incentives offered by developers, such as luxury cars, foreign trips, discounts of 15%-20%, and deferred payment options, have proven ineffective in attracting buyers. Widespread fears of a recession and a generally depressing economic sentiment have compelled real estate companies to reassess their strategies and scale back expansion plans, particularly in the high-end and premium segments.
Shift to Affordable Housing
In response to the challenging market conditions, the focus has shifted towards providing budget-friendly housing options. This strategic move aims to capitalize on higher sales volumes and tap into the potential of Tier-II and Tier-III cities.
Call for Government Support
Parsvnath Developers Chairman Pradeep Jain emphasized the need for government assistance in promoting affordable housing initiatives. He highlighted the significant obstacle posed by high land costs, suggesting a dedicated scheme to address this issue:
"The Government should help the developers to launch a special scheme to promote affordable housing as costly land was a big hurdle."
Omaxe Chairman and Managing Director Rohtas Goel echoed the call for government intervention, stating that the current land scarcity is artificial and restricts developers' ability to lower prices:
“There is an artificial scarcity of land. No cushion is left in the hands of developers to reduce the prices.”
Omaxe has proactively established National Affordable Housing and Infrastructure Limited to expand affordable housing options for a wider segment of the population.