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Speculators spur property rate spike

After a long slump, speculators are back in the country’s property market.

delhi Updated: Oct 12, 2010 00:51 IST
Vivek Sinha & Sachin Dave

After a long slump, speculators are back in the country’s property market.

That's bad news if you are looking for discounts or bargains while buying a home.

The deep discounts of last year, when the downturn sent the demand for housing plummeting, are all but over. Developers now are in no hurry to sell, say industry insiders and experts.

Speculators — rich investors looking to re-sell homes at a profit — are said to be buying up in bulk. Home prices have risen by anything between 10 and 50 per cent in 2010 in the National Capital Region, Mumbai and Pune, industry officials say.

Abhishek Kiran Gupta, research head at property consulting firm Jones Lang LaSalle India, said demand revived last year, triggering a rush of profit-hunters, who spelt an end to a honeymoon of discounts.,

“We will be staying away from discounts,” said Abhisheck Lodha of Lodha Developers in Mumbai. Samir Jasuja, founder and CEO of PropEquity, was forthright. “Around 50 per cent properties are being bought over by investors and speculators,” he said.

In 2008 and 2009, discounts offered were up to 20- 25 per cent. Freebies were also added to purchases.

“Discounts and concession schemes will be muted this year around,” said Anand Narayanan K.B., national director, residential segment, at realty consulting firm Knight Frank.

However, some incentives may come to markets where end-users are slower to buy, said Rakesh Kaul, chief operating officer at developer Ansal API. A lot could depend on the initial public offers (IPOs) of realty firms currently hitting the stock market. If their attempts to raise cash fall short, 30 to 35 per cent discounts could well come your way, said Pankaj Kapoor, managing director at research firm Liases Foras.