Downturn real(i)ty dawns on builders

The pressure to sell under-construction units has forced developers in the tricity to reduce prices by as much as 25 to 20 per cent. Also,the strain of arranging for fresh funds,compounded with repaying debts owed to financial institutions,has left developers with no option but to offer units at reduced prices.

“A 1000-square feet apartment in Gulmohar City,Dera Bassi,by Raglan Infrastructures Limited was earlier available at Rs 16 lakh. Now,the price has dropped to Rs 12.71 lakh,” said R P Malhotra,a developer in Zirakpur.

All realty experts agree on this recent phenomenon. “Under-construction projects developers are unable to gather funds and are trying to lure customers with incentives of various kinds — both cash and kind. As customers are banking on the builders’ financial credibility,the resale prices of completed projects like Sunny Enclave and Rishi Apartments in Mohali remain steady,” said a property expert Brigadier Inderjit Singh.

Rajit Kakkar,managing director of Silver City,one of the developed projects in Zirakpur,said: “The prevailing resale rate in Silver City is anywhere between Rs 2,200 and Rs 2,300 per square feet,while the launch price of yet-to-be-built apartments in Dera Bassi is between Rs 1,200 and 1,600 per square feet.”

The developer has sold out all 322 apartments in Silver City Main and 80 of the extension in Zirakpur.

“These projects were launched around two years ago with an average price of Rs 1,600 per square feet,which subsequently increased to Rs 2,300 per square as the resale value. Today,as the area is completely developed and inhabited,the resale price has not been affected at all,” added Kakkar.

A reason why developed projects have been able to maintain their prices,irrespective of the current market situation,is that buyers and investors who had bought units in developed areas when the realty sector was on an upswing are not ready to sell off at reduced margins.

What keeps property holders going is the security of their investments. “I own an independent house in Sunny Enclave,Kharar,which I have given out on rent. I believe this area will remain in demand even as prices of nearby under-construction projects have witnessed a significant decline,” said Pawandeep Singh,a resident of Chandigarh.