The Silver Lining, Finally

The property market slowdown has led developers, big and small, to offer incentives to homebuyers

The unprecedented growth of the property market in the last three years is slowing down to more sustainable speeds. High home loan interest rates, premium priced products and high inflation combined are impacting the purchasing capacity of homebuyers. The residential sector currently is witnessing a constriction in demand.
While small developers began correcting the prices, well-financed developers chose to retain the original price tag. No longer. Builders from all categories are now offering discounts or adopting innovative schemes to spur demand.

Says Sunil Bedi, managing director of developers JMD Group, “Many developers are tackling the price battle by going in for smaller units and cutting down on price per square foot.” (See Mid-Income Housing on Developers’ Cards, page 10).

Ansal API Limited recently launched a 24-month EMI waiver scheme for two projects, Orchard County in Mohali and Sushant City in Jaipur, in a tie-up with HDFC and Axis Bank.

Two months earlier, BPTP launched EMI-free and interest-free holiday schemes to promote their project, The Resort, at Faridabad. Under the scheme, a customer pays only 15 per cent of the amount while booking the apartment: the EMI begins only after possession. Says Amit Raj Jain, vice-president (marketing) BPTP: “Customers don’t have to pay the EMI and rent simultaneously.” The company has also launched a similar scheme for their Park Grandeura project at Faridabad.

Unitech, which used to sell two-bedroom apartments of 1,800 sq. ft, has now reduced the apartment size to 1,250 sq. ft, thus cutting prices by 33 per cent.

Omaxe, which recently diversified into affordable homes, plans to align itself with mortgage brokers to offer exclusive mortgage financing services. “This enables prospective buyers to become pre-qualified for a mortgage and accelerate the approval process, and likewise the rate of occupancy,” says Rohtas Goel, chairman and managing director, Omaxe.

In Bangalore, there has been a correction of about 10 per cent to the prices. “But that is only on the outskirts of the city,” says the Bangalore-based real estate agent and property appraiser, Farook Mahmood, who is also a director of Silverline Realty. In Chennai, the ongoing schemes are a free Maruti car on payment and shared registration costs.

In the North, Suncity Projects is replacing normal air-conditioning systems with hi-tech ones and providing Italian instead of Turkish marble in their units. Says director Ashok Aggarwal, “Without charging anything extra, we are giving added value to our customers.”

Amid this bonanza, however, Anshuman Magazine, chairman and managing director, CB Richard Ellis South Asia has a word of caution for homebuyers. “The record and land equity of a developer is as important as the location and price of the property one is planning to buy,” he says.