For the past few months the question doing the rounds of the real estate industry has been: who will blink first,the buyers or the sellers? Last week,DLF,the largest player in the field,answered that question conclusively. It announced an official price cut by 20 to 30 per cent in its ongoing projects in Chennai and Bangalore with a refund to those who had earlier booked at a higher price.
Pune developers,who have been trying to push discounts garbed as freebies and incentives though game for another standoff,have begun taking some reluctant steps to end the stalemate.
A fortnight or so ago Rohan Developers announced a price protection scheme that offered security against any future drop in prices. Last week Mont Vert,another major developer threw open its unsold flats at four locations for rental purposes saying it was willing to convert rents into purchase installments in case the tenant wishes to buy that flat later on.
In my 20 years in this industry I have never seen worse sentiments among buyers, said Shashank Paranjpe of Paranjpe Developers that has the mammoth Blue Ridge Township going and took the market by surprise by announcing 200-bungalow project Forest Trails in Bhugaon a few days back.
While insisting that the township project has not been hit too hard and that cancellations have been few,he admits that he has cut rates at Blue Ridge from Rs 4000 to 3500 a sq ft. We have to go with the market. Also with steel,cement prices down the cuts were all the more possible. October to December was the worst period; we have noted an improvement since January-February and received almost 1,000 calls a day for the bungalow project, he said.
“People have the money; the reason they are not putting it in projects is because they expect prices to go down further. Our price protection policy is to remove this insecurity from their minds, said Sanjay Lunkad of Rohan Developers adding that they have reduced rates by about 15 per cent in their projects. We have to do it – it’s a buyer’s market, he added.
Despite all this,buyers are still not biting. Economic meltdown,job uncertainty,low morale and the thought that prices will drop further are keeping buyers away though they have the capacity to buy, said Manish Kaneria of Mont Vert Builders who,recognising the trend,has decided to target the rental money consumers are dishing out instead of purchases with the rental scheme floated by them. Admitting a price cut of 12 per cent in their Baner Road project,Kaneria says,Basically 80 per cent of buyers were IT professionals. With this sector facing difficulties the real estate had to face the consequences.
The no-buy sentiment has also hit the resale market. Ashok Thakur has been unable to sell his five-year old flat in a well-known society in Baner for the last three months despite coming down almost Rs 5 lakh from the price it commanded last year. I have had about a 100 people visiting the place,all love it,but none make an offer,or if they do it’s so absurd that I cannot consider it. So now I have decided against selling it. I am putting it back on rent, Thakur said.
A real estate developer put it all in a nutshell. There are people who want to sell but at the prices of six months ago – and if they are not desperate they will hold on. Buyers want to buy at current rates,minus 10 per cent against a future drop. Add to all this the recession in US and Europe,the political turmoil in Pakistan and Bangladesh and the uncertainty of our own polls results,and no one wants to take a decision now on property, he said.
SOPS FOR REAL
DLF: 20-30% price cut in ongoing projects in Chennai and Bangalore,refund to those whove already booked at earlier price
Rohan Developers: A price protection scheme offering security against any future drop in prices
Mont Vert: Unsold flats at four places opened for rental; may convert rents into purchase installments if the tenant wishes to buy later on. Also,12% cut in Baner Road project
Paranjpe Developers: Price cut at Blue Ridge Township,from Rs 4000/sq ft to 3500/sq ft