Investors selling flats at discounts
Expecting realty rates to fall soon, individual investors have started selling their properties at discounted rates.mumbai Updated: Dec 28, 2010 01:20 IST
Expecting realty rates to fall soon, individual investors have started selling their properties at discounted rates.
Property brokers are being flooded with calls from investors offering rebates of 10 to 30% on their properties. “We have advised our investors to exit at the earliest and book maximum profits because prices will come down anytime,” said Ram Prasad Padhi, chief executive officer, mumbaiproperties.com, a brokerage firm.
Padhi said investors have been advised to reinvest in property after markets come down.
Investors have played a major role in the realty market in the last three years because they have cornered more than 50% of the properties booked during the period.
Unlike end users, who pay in installments, investors book flats in the pre-launch stage by paying 50 to 100% of the cost thus providing capital to builders. Their aim is to resell the property and make profits.
These days, investors are trying to sell their properties so that they can make profits while the rates are still high even if they sell at rates lower than the market price.
In Bandra, investors who have booked flats in a project by a leading infrastructure group are quoting Rs18,000 a square foot when the prevailing rate is Rs23,000.
Another leading builder in Oshiwara, who is quoting Rs12,000 a sq ft, has his investors selling at Rs8,600. Investors in Borivli are ready to sell for Rs7,500 a sq ft where the rates are above Rs8,500 while properties in Malad are being sold at Rs7,000 a sq ft when the prevailing rates are upwards of Rs8,500.
“This indicates that prices are set to drop,” said Pankaj Kapoor, chief executive officer of real estate research group Liasas Foras. Anuj Puri, chairman and country head, Jones Lang LaSalle India, a real estate consultancy firm, said prices have now reached the peak.
Builders agree that a correction in realty rates is expected. “Only projects in which prices are inflated will reduce rates. Investors will exit from these first,” said Abis Rizvi, director, Rizvi Builders.
Sukhraj Nahar, director, Nahar Group, said investors are selling now because prices will reduce from March.