Top city builders meet to discuss slashing prices

This meeting by the builders smacks of an oligopoly where these moneybags decide to raise or drop rates by consensus. The SEBI and other organizations should look into this meeting for price fixing and prosecute the ceo's of these companies. Imagine a meeting between Airtel , Vodafone and Reliance to decide on per minute rates. This is a cartel and should be accountable for monoplistic practices. The biggest irony of this article is the shedding of crocodile tears for the poor laborer who has seen his daily wages drop to 50rs from 150 rs. If these builders who prices apts for 50,000 per sq/ft , they can sure pay a half decent wage to someone who toils in the heat and sun, while these neo-rich bozos sip drinks in the comfort of a 5 star hotel

The 2nd bigger irony is blowing the trumpet of the Times of India, that they were the first to report on the price drops. While they reported price drops, they also reported why prices are going to go up and how 40,000 per sq/ft is real steal for a crappy apt in Bandra. Such irresponsible journalism has made the times of India, the toilet paper of India.


Nauzer Bharucha | TIMES NEWS NETWORK

Mumbai: At least half a dozen of the city’s top builders met at a prominent five star hotel in central Mumbai on Friday night to brainstorm about the one thing that has been worrying them for the past several months—how to kickstart the virtually stagnant apartment sales following the downturn in the real estate market.
Among the several issues discussed was the possibility of reducing prices of flats if it helps sales to pick up. According to industry sources, the Maharashtra Chamber of Housing Industry (MCHI), which has leading developers as its members, is expected to explore this possibility at its meeting on Tuesday, although the matter is not on its agenda. Already, some builders have informally reduced their prices between 12% to 20% in their projects in the suburbs.
However, Mohan Deshmukh, one of the developers present at the dinner meet, denied that builders can ever take an unanimous decision to cut prices. “Every developer has his own priorities and it is up to him to decide on a price cut. The MCHI cannot take a decision on their behalf,’’ he said.
Although the property market began to flatten out about 18 months ago, Mumbai’s builders, by and large, have managed to hold on to their prices. Between 2004-2007, home rates shot up between 100% to 300% on an average, going up to 500% in certain high-end projects. Builders may move Centre to plead their case
Mumbai: Top city builders, who were peeling the pinch after global meltdown, participated in the brainstorming session to decide price cut on Saturday. The meeting commenced at 7.30 pm and wound up only at around 11 pm, sources said.
It is learnt that among some of the leading builders who were present at the meeting included Rajni Ajmera of Ajmera Builders, Dharmesh Jain of Nirmal Lifestyle, MCHI chairman Pravin Doshi (Acme Group) and Deshmukh, who is CEO of Deshmukh Builders and past chairman of MCHI.
There was complete unanimity among the participants that the industry is passing through an “unprecendented’’ crisis. This has affected not only the developers, but a host of ancillary industries, including a large army of unskilled labourers working at the project sites.
“A labourer who used to earn Rs 150 a day is today struggling to barely eke out Rs 50 a day because many projects have come to a standstill,’’ a leading developer told TOI recently. Virtually every Mumbai-based developer is on a cost-cutting drive including retrenching employees across departments.
The Mumbai developers are also thinking of representing their case to the Centre to increase the priority sector lending to home buyers from Rs 20 lakh to Rs 40 lakh. Early this month, the RBI had allowed banks to classify housing loans up to Rs 20 lakh as priority sector advance. The interest rate on such home loans is 1.5% lower than the normal rate of interest.
The downward trend in the property market began in January 2007 when banks began hiking their interest rates, and since then, bookings have continued to drop with every rate hike announced. The crisis worsened after the global economic meltdown affected the Indian market since the past few months.

Property consultants said even existing loan account holders are finding it tough to hang on as EMIs threaten to upset their monthly budgets. Last year, TOI was the first to report that several builders, dealing on a one-to-one basis with home buyers, had begun offering freebies like not charging for parking slots, not charging a premium for a floor rise and, in some cases, even offering to pay the stamp duty.