THE STOCK MARKET IS OVER 400 POINTS LOWER COMPARED TO LAST DIWALI. THE MOOD IS EQUALLY DOWNBEAT, BUT TRENDS ON THE GROUND SUGGEST THAT THE DOUBLE-DIP RECESSION FEARS ARE STILL IN THE MIND AND NOT SO MUCH ON THE GROUND, AT LEAST IN SOME CRITICAL SECTORS
While there seems to be a haze of gloom in the air--- America’s economy is still not back in the black, the European economy is in the doldrums; at home, the Reserve Bank of India has hiked key policy rates 6 times this year, food inflation has crossed the 9% mark— on the ground the reality is not one of gloom and doom.
Yes, though there are concerns in the minds of the people, sectors such as hospitality, food and beverage, apparel retail and even real estate, look to be fairing much better now under the given circumstances than they were a year a ago, when the market was considered to be moving along a positive trajectory.
BUYING, A REALITY IN THE REALTY MART
And finally, the most interesting of them all --the realty mart, which is most impacted by interest rate hikes, has actually been able to attract buyers across the price spectrum.
Sushil Mantri, CMD, Mantri Developers & President, CREDAI-Karnataka, says "Volumes are much better now as compared to last year, totaling to a 25% increase. Interestingly, more than 50% of the demand has been from the non-IT crowd. The trend in demand is in Rs 30 to 40 lakh segment."
"Going forward the market is poised to do even better as prices have stabilized. Also there has been an office space absorption on 10 million sqft this calendar as compared with 7 million sqft last year. Hence, next year when companies hire people, we will see a spurt in the demand in the residential space."
Sudeep Chandran, owner, Terrafirma Developers, says, “Though there are talks of recession, there are more transactions happening now than last year. In line with this trend builders are launching projects.” Nitesh Estates’s 412-unit residential project, Cape Cod, on Outer Ring Road, which was launched 2-weeks ago, has sold 100 units. The apartments are priced at Rs 55 lakh onwards. Similarly, Prestige’s, Tranquility, a 3,000 unit residential project coming up in Budigere, off old Madras Road, with apartments starting from Rs 20 lakh onwards, has sold around 1,000 to 1,200 units in pre-launch sales.
Century is launching two residential projects in the next two months at prices starting from Rs 70 lakh upto Rs 2 crore, which the developer believes, "is the price range that is seeing a lot of buyer interest."
According to Farook Mahmood, CMD, Silverline Realty, one of the leading realtors in the city, “We are reporting a growth in business of 200% on sales of apartments priced between Rs 20 lakh and Rs 35 lakh as compared to last year, and a 30% to 35% increase on apartments/villas priced over Rs 1.5 crore.”
Chandran adds, “A lot of foreign companies are looking to buy industrial land and in this regard we have done 3 transactions in the last six months totaling to Rs 100 crore.”
Sushil Mantri, CMD, Mantri Developers & President, CREDAI-Karnataka, says "Volumes are much better now as compared to last year, totaling to a 25% increase. Interestingly, more than 50% of the demand has been from the non-IT crowd. The trend in demand is in Rs 30 to 40 lakh segment."
"Going forward the market is poised to do even better as prices have stabilized. Also there has been an office space absorption on 10 million sqft this calendar as compared with 7 million sqft last year. Hence, next year when companies hire people, we will see a spurt in the demand in the residential space."
Sudeep Chandran, owner, Terrafirma Developers, says, “Though there are talks of recession, there are more transactions happening now than last year. In line with this trend builders are launching projects.” Nitesh Estates’s 412-unit residential project, Cape Cod, on Outer Ring Road, which was launched 2-weeks ago, has sold 100 units. The apartments are priced at Rs 55 lakh onwards. Similarly, Prestige’s, Tranquility, a 3,000 unit residential project coming up in Budigere, off old Madras Road, with apartments starting from Rs 20 lakh onwards, has sold around 1,000 to 1,200 units in pre-launch sales.
Century is launching two residential projects in the next two months at prices starting from Rs 70 lakh upto Rs 2 crore, which the developer believes, "is the price range that is seeing a lot of buyer interest."
According to Farook Mahmood, CMD, Silverline Realty, one of the leading realtors in the city, “We are reporting a growth in business of 200% on sales of apartments priced between Rs 20 lakh and Rs 35 lakh as compared to last year, and a 30% to 35% increase on apartments/villas priced over Rs 1.5 crore.”
Chandran adds, “A lot of foreign companies are looking to buy industrial land and in this regard we have done 3 transactions in the last six months totaling to Rs 100 crore.”
RESTAURANTS, HOTELS IN HIGH SPIRITS
Nandhini, a restaurant chain specializing in Andhra cuisine, increased its prices 2 months ago by around 3% to 5% to factor in the rise in prices of key food ingredients. While the restaurant chain anticipated a drop in sales, on the contrary, its reporting a growth in sales of 12%-15% over last year “on account of more people dining out,” says, Mahesh, business development head, Nandhini.
Fine-dining standalone restaurants in the city, which had taken a beating in the downturn of 2008-09, are clocking higher sales of 20%- 30% on an average as compared with same period last year, with weekends being a sold out affair at most restaurants, and weekday dining, which had become almost nonexistent, reporting a 20% to 25% growth in sales.
“Inflation has been bad forcing prices to increase, thereby grossmargins are under pressure, but, that is now being compensated by the increase in sales,” says Venkatesh Bhat, corporate chef & CEO, Billionsmiles Hospitality.
Another key indicator of positive business sentiments comes from luxury hotels in the city who are clocking 70% - 80% occupancy levels, of which 90% is foreign traffic. This, despite inventory in the city increasing by 700-900 rooms in the last one year.
According to Andrew Hendrian, GM, Leela Palace, “On a year to date basis, the international business traffic has grown by 12% to 15%. Our ARRs are up by 12% as compared to last year same period, which is a clear indication that business if growing, and despite the fact that this month has a lot of festive holidays.”
SHOPPERS STILL ON THE PROWL
On the retail-apparel front, despite having been impacted by an excise duty levy on branded apparel, which translates to a 20% increase in prices of goods for consumers, and a surge in the prices of cotton by almost 70%, most retail stores have been able to clock double-digit growth in volume.
“The serious shopper continues to shop; however, impulsive buyers have reduced. All our stores our seeing healthy growth rates on a liketo-like basis,” says Arun Sirdeshmukh, CEO, Reliance Trends. But, he points out that bulk of the sales are coming from brands positioned in the mid-to-lower end of the price spectrum, “as consumers are trading down.”
Capillary Technologies, a product IT company with a focus on the retail sector, in its survey has thrown up interesting data on consumer buying patterns within the retail industry for ongoing festive season. Data shared by the company states that the apparel industry has increased its sales by 15% - 20% compared to last year Diwali presales, and the figure is expected to increase up to 40%.
It further states that more than two-third of the apparel stores have seen a 20% increase in customer spend during this festive season as compared to last year.
Source: Times of India-Bangalore
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