Indian Builders Cut Prices to Prop Up House Sales..!

Major real estate companies such as  L&T Realty are offering projects at reduced market rates to attract house buyers who have been sitting on the fence waiting for price correction

Indian Builders have begun to bring down prices to prop up house sales in an abysmally dull property market, gladdening the hearts of potential buyers.

Sold Entire Inventory In 10 days.!

Nearly a month ago, Mumbai builder Lodha Group, which had bought DLF Ltds Lower Parel land past year, and launched a luxury project on the site, sold its entire inventory in 10 days by pricing these apartments at an 18 % discount to the prevailing market rate.

In all,  750 Rs. 3.5 crore to Rs.  6.75 crore houses were sold like hotcakes.

 

700 Flats Sold on Launch Day..!

Another Mumbai builder Godrej Properties tried a similar trick in Delhis upcoming real estate hotspot the Dwarka-Manesar expressway. It sold all its 700 flats on the launch day, when projects all around it were still chasing buyers.It is all about finding the right price point, says Mr. Anshuman Magazine, Chairman and Managing Director,CBRE South Asia.

In india's major cities, real estate prices are much higher than they should be and real prices should be lower, he adds. But all that looks like it is changing for now. And it is the big builders who are taking the lead in cities around the India,  forcing others to rethink.

L&T Realty launched Emerald Isle in Mumbais lakeside Powai area at Rs.15,500 per square feet creating a flutter in the area where the market rate is over Rs. 17,000 per square feet.

20 % Discount for Bulk Buyers..!

Nirman Realtors & Developers launched its project at Malad at a 20 % discount for bulk buyers & sold most of its inventory.

On the Dwarka-Manesar Expressway, Emaar MGF sold 250 houses in its project Gurgaon Greens in just a week this January, 2013 by aggressively pricing it at. Rs. 6,000 per square feet while other projects were priced at Rs. 7,000 per square feet.

Over subscribed by 3 Times within 3 Days..!

On the same stretch, Adani Realty, which launched its first project in the NCR (National Capital Region) region, launched 500 flats, which got oversubscribed by 3 times within 3 days, says Mr. Tarwinder Singh, Chief Executive Officer of the company.

Many real estate builders are driving volumes through disruptive pricing, says Mr. Abhay Khemka, owner, Khemka Investments & Properties, a real estate brokerage firm in Gurgaon. This is the right pricing. We are expecting others to follow suit.

In Bangalore, where sales in most projects are usually gradual, Provident Housing saw about half its stock of  548 flats in a newly launched property Provident Harmony being snapped up in ten days as the developer brought down the overall ticket size by reducing the size of the flats.

 

Right Flat Size and Right Price..!.

There is a new requirement from buyers, which is about the right size and right price.

Several builders make the mistake of launching larger size flats, making it unaffordable for buyers. We decided to stick to certain profitability (factors) by pricing them lower than competition, says Mr. Jackbastian K Nazareth, Chief Executive Officer, Puravankara Projects, the parent company of Provident Housing.

1,300 Applications for 750 Flats..!

Lodha, which bought the NTC mill land in Lower Parel from DLF Ltd for Rs. 2,725 crore last year, got 1,300 applications for the 750 flats it had launched in the project codenamed Blue Moon. We wanted to challenge the convention in south Mumbai by offering luxury residences here at ticket sizes up to 50 % lower than those currently available,  says  Mr. Abhisheck Lodha, MD, Lodha Group.

House sales across India have lagged in the last few quarters because of the negative market environment, accentuated by high property prices in many locations.

Housebuyers have been sitting on the fence, waiting for property prices to correct &  that put developers in a spot of bother. This has pushed up the level of unsold house inventory across India dramatically to 6.02 crore square feet at the end of the December quarter, 2012 which would take up to 29 months to be sold at the current pace of absorption.

Discount Sales...!

Project : Blue Moon

Developer : Lodha Deveopers

City Launch: Mumbai

Price (Per Square Feet) : Rs. 23,391

Average Location Price

(Per Square Feet) : Rs. 28,364

Project : Emerald Isle

Developer : L&T Realty

City Launch: Mumbai

Price (Per Square Feet) : Rs. 15,000

Average Location Price

(Per Square Feet) : Rs. 17,087

Project : Woodland Heights,

Developer : DLF Ltd

City Launch: Bangalore

Price (Per Square Feet) : Rs.3,300

Average Location Price

(Per Square Feet) : Rs. 4,348

Project : KUL Nation

Developer : Kumar Urban

City Launch: Pune

Price (Per Square Feet) : Rs. 3,550

Average Location Price

(Per Square Feet) : Rs. 4,000

Project : Gurgaon Greens

Developer : Emaar MGF

City Launch: Gurgaon

Price (Per Square Feet) : Rs. 6,000

Average Location Price

(Per Square Feet) : Rs. 7,052

Mumbai and NCR have been facing a problem of high prices for a number of quarters but now even other more affordable markets such as Pune & Bangalore are heading in that direction.

Sometimes, greed takes precedence over efficiency impacting both the consumer sentiment & productivity of the developer, says Mr. Pankaj Kapoor, Managing Director, Liases Foras, a non-brokerage real estate research &  rating firm, which services clients such HDFC, Deutsche Bank &  Standard Chartered Bank.

In the past few months, though, several real estate developers across India have cut prices.

The move has led to better sales. This shows that pricing was the main concern of housebuyers, says Mr. Lalit Kumar Jain, National President, Confederation of Real Estate Developers Associations of India (CREDAI). 

Jains company Kumar Urban Development launched a township project KUL Nation where it sold 400 flats in a week,with pricing that was 10% to 15 % lower than competition.

Src: ET - Mr. RAVI TEJA SHARMA, KAILASH BABAR & SOBIA KHAN -  NEW DELHI, MUMBAI and BANGALORE

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