With realty sales already down, the current US and European debt crises have added to the uncertainty, which in all possibility would force builders to reduce the rates that are currently hovering at exorbitant levels, say experts.
According to real estate consultation firm, Jones Lang LaSalle India, the real estate market is in a confused state. “The debt crises have affected sentiments in the realty market and the coming months would see developers facing a liquidity crunch, affecting their projects,” said Ramesh Nair, managing director, (western India).
“Many builders, especially those with projects in the suburbs, would be forced to cut their rates by 10-15%,” he added.
Pankaj Kapoor, managing director, Liases Foras, said the crises would prove to be beneficial to homebuyers. “Banks will now be stricter while lending and also insist on repayment of loans. The holding capacity of many builders will reduce, forcing them to cut prices to tide over the situation,” said Kapoor.
Both agree that domestic investors, which used to be major fund providers to the realty industry, have become cautious and selective, aggravating the crises further.
In the last few months, realty rates have peaked to such high levels that there are very few homes costing within Rs1 crore across the city. Though the last few months recorded low sales, builders continued to hold on the prices keeping houses beyond the reach of the majority of homebuyers.
The Maharashtra Chambers of Housing Industry (MCHI), the apex body of the builders , denies any affect of the US crises but agrees that reduction is in the offing.
“There may be some marginal cuts by individual builders,” said Paras Gundecha, president, MCHI.
Rajesh Vardhan, managing director, Vardhman Builders said, “Builders facing financial burden will definitely give discounts in the coming months.”