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Builders claim 30% cut,seek bailout

After having refused to acknowledge for the better part of last year that a real estate slump was happening in Pune as in other cities,Promoters and Builders Association of Pune on Wednesday claimed that prices had already been slashed rates by 30 per cent.

Written by Express News Service | Pune |
January 8, 2009 12:35:55 am

Not true,say estate agents

After having refused to acknowledge for the better part of last year that a real estate slump was happening in Pune as in other cities,Promoters and Builders Association of Pune (PBAP) on Wednesday claimed that prices had already been slashed rates by 30 per cent. And now,PBAP said,it was up to the state government and the civic administration to undertake measures to stimulate the realty sector by reducing taxes.

“I had personally written to all members of PBAP to sell apartments at the lowest possible rates and they have responded positively. The properties are being sold at affordable prices to customers and prices have been lowered up to 30 per cent,” Lalitkumar Jain,President,PBAP,said. Rajesh Chaudhari of Prestige Developers said it was up to individual builders to decide on the property prices as per their capacity. “I have reduced rates by 15 per cent and any further reduction would mean a loss.”

But talk to the real estate agents and they don’t agree. Maj Mathew Oommen,a real estate consultant,said there was no formal reduction of rates but builders were open for bargaining. “Even then,there is no response from the potential buyers and this has resulted in almost no deals taking place for a few months now,” he said.

Lt Col A K Ahuja,a prominent property agent,said the builders have not increased rates in the last few months. “This can be considered as good as a reduction in property prices. There might be a drop in the rates of upcoming projects,but not the existing ones,” he said.

Another agent who did not want to be named said,“The builders have been merely saying that there is a reduction in property prices but nothing of that sort has taken place so far. They are holding the properties expecting the situation will change.” But Jain maintained that market correction had already taken place. “PBAP members have even been asked to keep away from offering freebies as it increases the property cost,” he said.

On the builders not constructing 1-BHK apartments,he said the developers were asked to construct such apartments,but 60 per cent of the apartments are still unoccupied. “Affordable housing means not smaller apartments but cost affordability for buyers,which has already been done by builders,” Jain said. Buyers were still interested in buying 2-BHK or 3 BHK. PBAP criticised both the state government and the Pune Municipal Corporation for not supporting it even though the central government had taken steps towards re-stimulating the market. The real estate industry is going through a bad phase as any other industry and the shortage of cash flow has affected the business,Jain said.

Taxes alone account for 16 per cent of property cost and any further increase would adversely affect prices,he said. “The Centre has taken a lot of measures to stimulate the real estate industry,but the state government has maintained the higher ‘Ready Reckoner’ rates in spite of a market correction. Also,the increase in various development charges by the PMC is affecting the industry adversely,” Jain said. The PMC has increased premium charges by 130 per cent four years,he added.

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