Mumbai Builders offer discounts before festive season
Dipping realty rates combined with the Reserve Bank of India’s (RBI) stringent rules prohibiting banks from making upfront payments in the 20:80 scheme have builders offering discounts for the upcoming festive season.mumbai Updated: Sep 23, 2013 08:40 IST
Dipping realty rates combined with the Reserve Bank of India’s (RBI) stringent rules prohibiting banks from making upfront payments in the 20:80 scheme have builders offering discounts for the upcoming festive season.
Builders and analysts said the RBI’s curbs have severely hit builders, who are already facing a liquidity crisis.
“Many builders are secretly reducing prices for consumers as there is liquidity crunch,” said Anand Gupta, secretary, Builders Association of India (BAI), an apex organisation in the sector.
This view is shared by Jones Lang LaSalle India (JLLI), a realestate consultancy firm.
“Buyers with cheque books and pre-approved home loans are certainly capable of bargaining for a better price,” said Om Ahuja, chief executive officer (CEO)-Residential Services, JLLI.
Some discounts on offer include a direct 10-15% cut in the existing price, floor-rise charges being waived, flats being registered at no cost, free maintenance for three years, gold coins and cars on purchases, as well as free club-house memberships.
The Maharashtra Chamber of Housing Industry (MCHI) also announced a property exhibition next month, where builders would propose sops for buyers.
“We expect many builders to come in with discounts and offers as real estate sales normally rise during the Diwali festival,” said Paras Gundecha, former president, MCHI.
The real estate sector has experienced a watershed phase for the past three years, with soaring prices that have put homes beyond the buyer’s reach.
At present, with the RBI tightening loan conditions, builders are faced with a liquidity crisis.
The central bank’s most recent policy on the 20:80 scheme prevents banks from making upfront payments to builders, instead to release payments based on the progress of construction.
According to Pankaj Kapoor, CEO, Liases Foras, a real estate research firm, price cuts are inevitable considering how difficult it is for builders to hoard such a large unsold inventory.
“There are more than 1.37 lakh unsold units in the MMR region itself. The builder’s holding capacity is gradually decreasing,” Kapoor said and added that while builders were reluctant to openly announce a reduction in prices, the different discounts on offer is attracting the buyer,” he added.