CHENNAI: In a move that is bound to shake up the realty market in the city, leading builder Ceebros has dropped prices for residential projects in the upmarket Nungambakkam, T Nagar and Poonamallee High Road areas. The disruptive strategy, it says, is only to ensure that it is not saddled with unsold stock at a time when the market is very sluggish.
The project on Venkatraman Street in T Nagar was priced 16,000 per sqft, the one on Nageswara Road in Nungambakkam for 14,000 per sqft and on Poonamallee High Road for 12,000 per sqft, as against the 20,000 per sqft being charged by other builders in the recent past.
Subba Reddy of Ceebros said, "We initially planned to price them higher. But for the kind of amenities we are providing, we wanted to be realistic, and hence decided to reduce the price. All our units are smaller in size and they are all sold out now."
The move was welcomed by market watchers, who said a correction in prices would only help sales.
Reacting to the development, IndiaProperty CEO Ganesh Vasudevan said, "A healthy correction in price will give a fillip to off-take. About 10-15% correction is healthy for all stakeholders because prices are prohibitively high in the central business districts of Chennai. Coupled with a price correction, if the interest rates also drop, the real estate market will pick up."
Vasudevan felt if more builders were to drop prices, it would have an impact on land prices too.
Ever since it recovered from the 2008 slump, Chennai realty market had been witnessing an unprecedented boom. As per the residential price index brought out by the National Housing Bank, the prices in the central business districts had witnessed more than three times appreciation since January 2007. Riding high on the euphoria, developers had clinched big budget land deals to the tune of Rs 2,000 crore in the city in the last one year. Many of those projects are yet to hit the market. However, indications are that the developers who had picked up those properties would want to price their projects between Rs 25,000 and Rs 30,000 per sq ft. What impact Ceebros will have on them is to be seen.
The current sluggishness in property sales may continue only for two more quarters, says international realty consultant Jones Lang LaSalle India's residential services CEO Om Ahuja. He felt sentiments are all set to improve on account of increased corporate earnings and a revitalized capital market in the next fiscal.
"With exports-led sectors set to flourish in an improving economic climate, and agriculture sector poised for a revival on account of an excellent monsoon last year, a pick-up in GDP growth by the 3rd quarter of 2014 is definitely on the table. The multiple measures by the Central and State governments as well as the RBI to contain inflation will further improve market sentiments," he noted. Once the positive sentiment gathers forward momentum, fence-sitters will rush to buy apartments, felt Ahuja.