Shrinking demands coupled with inflated prices has left realtors with little choice but to sell their houses at much less profit margins. From profit margins up to 65 per cent per unit, these companies are now contend with selling their units at half the margin.
The country’s largest developer, DLF Ltd, sold merely 458 low-end units this October, said the company spokesperson. DLF’s net profit fell 16.6 per cent to Rs 639 crore on a 4.1 per cent decline in sales to Rs 1,074.9 crore in the second quarter.
DLF’s consolidated debt has increased to Rs 14,670 crore as on 30 September 2008 from Rs 9,930 crore as on 31 March 2007.
“Projects are not selling, price cut is the first option for developers,” said RR Singh, director general of the National Real Estate Development Council.
Unitech’s market value has eroded to Rs 3,500 crore from Rs 65,000 crore in January, while it has a debt of Rs 8,400 crore.
Realtors have been cutting prices slightly in the past. Parsvnath slashed up to 20 per cent on prices, and Omaxe up to 15 per cent.
Unitech has also slashed prices of its upcoming projects, said R Nagaraju, GM, Unitech. “Specific projects ranging between Rs 75 to 80 lakh in Gurgaon have come down to Rs 40-45 lakh now.”
However, this may not be the last word in this saga of price cuts.