It’s here. After talking of a rebound, putting up with stagnation and offering freebies and discounts, developers hit by a demand crunch and economic slowdown are biting the real bullet, lowering prices in key apartment zones in or around Delhi, Mumbai, Bangalore and Hyderabad.
Real-estate prices across the country have fallen by 10-40 per cent. And while prices vary depending on location, size, quality, amenities and time of possession, there are clear indications that the earlier price surge created by speculation and high growth has petered down. Developers are generally still not cutting prices of existing projects, but they face a market in which re-sales could do much the same thing.
The country’s second-largest builder, Unitech, is planning new projects in the suburbs of Noida and Greater Noida at Rs 2,000-2,500 per sq foot (psf), according to a spokesperson. This is the same area where market players say prices were roughly twice as much a couple of years ago.
“It makes perfect sense for industry leaders to rationalise project prices,” said Anuj Puri, country head at real-estate consultancy firm Jones Lang LaSalle Meghraj. “That is the need of the hour.”
Market players say in the Gurgaon area, well-developed zones have over the past year seen rates slump by 8-12 per cent, but remote areas are seeing a crash of 20-35 per cent.
For example, a plot in Sushant Lok Phase II today sells at about Rs 23,000 per sq yard compared to Rs 30,000 only six months ago, a fall of 23 per cent. However, genuine deals are few because buyers are waiting for a further fall, while sellers are hoping for a rise.
In Noida, flats that went at Rs 5,000-6,000 psf a year ago now come for Rs 3,500-4,200, while in Greater Noida, the fall has been from Rs 3,000-3,800 psf to Rs 2,000-2,800 psf.
DLF is already selling a project in the New Gurgaon area that covers locations like Manesar at Rs 2,200 psf. A company spokesman said prices had dropped by at least 10 per cent in Chennai and by 25 per cent in Bangalore. Developers are not sure if there would be a similar fall in the North.
Buyers in Mumbai and Pune could expect a further 10 per cent reduction in prices, Puri said. In the Mumbai-Pune zone, realty prices for ongoing projects have already crashed by 25 to 40 per cent in the past six to nine months, say local market players.
“It’s difficult to predict the bottom (of prices),” said Niranjan Hiranandani, managing director, Hiranandani Constructions. “I don’t think prices will reduce further.”
In Pune, prices have come down to Rs 2,200-3,000 psf from about Rs 4,000 earlier. “The market has touched more or less 2005-06 price levels and unlike other places the conversion (deal) rate is high in Pune,” said Lalit Kumar Jain, chairman, Kumar Builders, a developer from Pune.
Prices in Navi Mumbai were zooming till 2007 with escalations in the region of 70-100 per cent in two years. But over the past year, a 20-30 per cent fall is clearly visible. “We have reduced our rates from Rs 7,000 psf, at which we sold six months ago, to Rs 4,700 now,” said Om Gehlot, whose project Gehlot Majesty is situated on Navi Mumbai’s Palm Beach Road.