MUMBAI: Call it monsoon madness if you will, but Mumbai’s builders have lined up some unusual incentives to stimulate apartment sales and cope with the problem of inventory build-up.
Sample this: While some developers are offering to pay stamp duty and registration fees, which can account for 4-10 per cent of the cost of buying a property, others are offering to pay power bills for a specific period.
Other incentives include free covered parking spaces (which in Mumbai costs over Rs 1.5 lakh), exemption from floor rise, discount on per square feet of the property, zero development charges, and, in some cases, even a paid holiday!
Lalit Kumar Jain, Chairman, CREDAI (Confederation of Real Estate Developers Association of India), said while it is difficult for developers to announce huge price cuts, in certain micro markets (as on the outskirts of Mumbai) developers are eager to sit across the table with buyers and negotiate deals. It all depends on the need and the scope for margin reduction, he said.
“In a situation when the money market is tight and cost of construction has increased substantially, it is very difficult to cut prices. Negotiated deals have been taking place, offering 10-15 per cent discount,” he said.
Aqua Lodha residential project, promoted by Lodha Developers, is priced between Rs 1.11 crore and Rs 1.82 crore, amounting to Rs 10,900 per sq ft. The developer is offering a discount of Rs 700/sq ft, with a ready-to-move-in option.
At the Grand Vista Apartments in Ulwe, Navi Mumbai, the going price is Rs 53.80-80.58 lakh for a flat. While this works out to Rs 5,100 per sq ft, the discount includes Rs 350 off per sq ft and zero brokerage. The apartments have a possession date of December 2016.
Ankita Heritage by Agrawal Realtors is offering a discount of Rs 500 per sq ft, provided 50 per cent of the price is paid instantly. The apartments at Panvel, near Mumbai, are priced between Rs 14.50 lakh and Rs 20.25 lakh, which amounts to Rs 2,500 per sq ft. It has a possession date of February 2014.
Flats at Gaurav Wood II at Mira Road, on the outskirts of Mumbai, are available at Rs 6,750 per sq ft.
It has a Rs 750 per sq ft discount offer and a lucky draw, which includes a Maruti Swift Dzire as the top prize. It is a ready-to-move-in project.
Om Asharay by the Om Group in Karanjade, Navi Mumbai, costs around Rs 17.22-Rs 28.49 lakh, making it Rs 4,100 per sq ft. The developer says one can book a flat with just 5 per cent down payment. The possession date is June 2014.
Admitting to a trend, Ravi Ahuja, Executive Director, at property consultant Cushman and Wakefield, said: “There has been a marked increase in discount schemes, especially in distant suburbs and pockets of Mumbai, where a correction was due. Discounts are being given depending on the developers’ profile or leverage. There is a clear liquidity crunch and owing to poor offtake, cashflow is jammed. A large debt needs to be serviced.”
Though schemes and discounts help developers make temporary sales, it is not a long-term solution, Ahuja said. Prices need to fall for sales to really pick up, especially in far flung suburbs, such as Panvel and Navi Mumbai, which have seen prices go up, though there has been no dearth of supply, he added.
“New projects are coming up, but old ones are not selling, leading to inventory build-up. This is increasing pressure on developers to push sales through such offers,” Ahuja added.
Attractive offers notwithstanding, new home sales in the Mumbai Metropolitan Region that includes Thane, Navi Mumbai and Raigad, apart from Mumbai, have fallen by 12 per cent for the June quarter, according to real estate research firm, Liasis Foras. Sales in April-June stood at 9,083, down from 10,325 during the January-March quarter.