Radha Seth spent more than four hours at a recent property exhibition, checking out apartment costs and the festive season discounts on offer. From limited period EMI waiver to gold coins or a car in gift, the list of freebies was long, and tempting.
Seth almost fell for some, but eventually opted to wait and watch.
“I checked with others scouting for a good deal and got a sense that it would make sense to wait,” said Seth, a housewife whose husband teaches at a private engineering college.
India’s property market has been among the hardest hit by the global financial turmoil as high interest rates and gloomier economic prospects have driven out buyers and squeezed funds for real estate developers.
Through this year, property prices have already declined more than 10 per cent in many parts of the National Capital Region and the slide is expected to continue for some time.
“One will see a further cut in prices by 10-15 per cent in the next few months,” said Anuj Puri, Chairman Jones Lang LaSalle Meghraj.Continued from Page 1
Many realty companies had tied up new projects to money from stock market and foreign investors. As those sources dry up with the global meltdown, they will be forced to cash out, even if it means selling existing stock at a lower price.
Potential home buyers are betting they would get a better deal if they wait and the price correction that might come their way would far outweigh the freebies on offer now. According to Shweta Jain, analyst at property advisory firm Cushman & Wakefield, freebies like stamp duty waiver amount to a saving of about 3-8 per cent of the total property cost.
As a result, sales during this festive season – which account a big chunk of annual sales – are expected to see “a significant drop” from last year, said Pranay Vakil, India head of global property consulting firm Knight Frank.
Still, developers are hoping they will be able keep the fall to the minimum with the help of innovative discounts and freebies.
They have tailored schemes to suit market sentiment. The buyer today is in a savings mode. So developers are focusing on differed payment facility, tie-ups with banks and waivers on stamp duty and registration charges; unlike last year, when they offered such incentives as a free ticket to Europe.
“Most developers are not directly cutting prices, but many have started offering furnished flats and on-table discounts,” said Puri. “As far as possible, developers do not offer rates discounted below the base cost, which includes the cost of land and construction.”
Also, realty firms and builders would like to hold the price line as long as they can. Because once they cut it formally, it could set off a chain reaction.
“The consumer is today well informed and reducing prices is the last thing a developer wants to do,” points out Vineet K Singh, Business Head, 99 acres.com.