2 builders drop prices by 20%

20% down, another 30% to go. Anmol used to be 4100 per sq/ft 3 years ago. Its time for it to return to mean

DNAIndia reports

Low demand, global crisis finally take toll

MUMBAI: Builders did everything to keep the realty prices high — from shrinking flats to laying off employees and offering freebies to prospective buyers. But the slowdown has finally made them wilt. Two major builders in Mumbai — Orbit Corporation and Wadhwa group — have cut their property rates by up to 20% amid a severe credit crunch triggered by the meltdown, low demand and high interest rates.

The Orbit Corporation, a real estate development company specialising in redevelopment schemes, has slashed its rates by up to 20% for its 10 projects under construction across the city. It brought down the rates from Rs70,000 per square foot (psf) to Rs60,000 psf for apartments at Orbit Haven, a project under construction on Napean Sea Road. The company has already reduced the area of the apartments to 2,500-2,700 sq ft instead of the planned 4,500-5,000 sq ft in the wake of the realty slump.

The company has brought down the rates for its projects in central Mumbai - Rs12,000-18,000 psf instead of the earlier band of Rs15,000-22,500 for 600-1,600 sq ft flats at Orbit Grande (Lalbaug) and Orbit Grand (Lower Parel).

“One has to accept that there is a slowdown and accordingly adjust your prices. There’s no harm in creating a demand by lowering the prices,” said Pujit Agarwal, Orbit Corporation managing director.

The Wadhwa group, which paid a whopping Rs831 crore for a plot of less than two acres at the Bandra-Kurla Complex, has also slashed its rates by Rs1,500 psf, bringing it to Rs10,000 psf for flats at Anmol Pride and Prestige, the company’s residential projects in Goregaon (West).

Group promoter Vijay Wadhwa said: “We had to reduce the prices as the demand is low because the rates are too high. When the demand is low, I can afford to reduce the rates.”

The group had also not given bonuses and increment to its staff this year. “The slowdown is definitely affecting and my staff understands the ups and downs of business. I could have dismissed 10 employees but I didn’t,” said Wadhwa.

Saneprice.com

I came across this web-site SanePrice.com which can be used as a good tool to share information about housing/plot prices in various locations of India. It uses the same principles used by Digg.com and other crowd-sourcing websites which attempt to figure out the consensus opinion, based on a large set of users. Once this site gets traction, the data will be a valuable set of unbiased information. I urge all readers to update as much information as they can, about plots/apts and rentals. Kudos to Anand for this endeavor.

CNN -IBN poll

CNN-IBN is conducting a poll on the state of the real estate market in India. Click here to cast your vote. The battle is between the hesitant buyer against to the defiant seller. Its a poker situation where each one is waiting for the other guy to blink. The banks are mute spectators to the shenanigans of the RBI governor and Chidambaram. They would rather lend at current rates and hope that builders drop prices, rather then lower rates and pass on the profit to the builders.

Builders in crisis mode in Mumbai

The Times of India is reporting on the slowdown in the building industry.

New housing projects on hold in city

Mumbai: The city is unlikely to see any new housing project coming up soon as the screws turn on the property market. Last month, Mumbai’s leading developers met and discussed the possibility of not launching new residential projects considering the slowdown, sources said.
“New projects are not viable, sales are slow and buyers are sitting on the fence. Every developer is looking at his own cash flow and many projects have slowed down. Each one is wise enough to take a call on what to do,’’ said Mufatraj Munot of Kalpataru, one of the city’s oldest builders and past president of the Maharashtra chamber of housing industry. He, however, denied that builders had taken a unanimous decision not to start new projects.

But with each passing week, stagnant sales is turning up the heat on the construction industry. “Builders are deferring launching of new projects. With banks and financial institutions turning the screws, the real estate market has dried up. There are no investors and the actual users are waiting for prices to come down,’’ said a property developer, not wishing to be identified.
With their backs to the wall, a majority of builders has also started retrenching employees. Last week, a prominent developer known for his signature buildings decided to virtually halve the 450 employees on his payroll, it is learnt.

Even the once lucrative transfer of development rights (TDR) market has lost sheen. Builders used to purchase slum TDR at Rs 4,000 a sq ft till about six months ago. It is now down to Rs 1,200 a sq ft. Still, there are few takers. Moreover, builders who have bought TDR have been unable to pay sellers. It is estimated that about 100 builders owe close to Rs 200 crore to TDR owners and traders.

In the market, although builders are not officially reducing the rates of properties, they are negotiating with individual flat buyers and offering discounts to bulk purchasers. In Bhandup, a developer recently sold six flats after he reduced the price from Rs 7,500 to Rs 4,200/sq ft. In Goregaon, the builder has offered a similar reduction to six buyers.

BUILDING BLOCK
On Ghatkopar’s LBS Road, work on residential project of a prominent developer has come to a halt n Members of a housing society near Bandra’s Bhabha hospital were recently taken aback when a prominent developer from the eastern suburbs withdrew his offer to redevelop the property n Another society near Khar gymkhana received a similar withdrawal letter from a builder from the western suburbs who is said to be “neck-deep’’ in debts n A Delhi-based developer, who had won the bid for a prime mill plot in 2005, hasn’t progressed beyond the basement level in two years n A south Mumbai property redeveloper has mortgaged a high-end flat in his upcoming building to the lender from whom he has taken a Rs 9 crore loan at 39% interest n A young developer with projects in Goregaon, Virar, Thane and Juhu is reportedly in big trouble, having taken loans from Kutchi, Marwari investors at 36% interest. He is believed to have put all his projects on hold