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Realty cos scale down prices by 40% to attract customers

REAL estate developers have found a new way of perking up the market. Unitech, DLF, HDIL, BPTP and others are offering a 30-40% discount on ongoing projects. Analysts believe that such projects will help stimulate demand and bring in the much-needed liquidity in the industry, which is already dealing with unsold stock in projects that were launched in the past one year.

“The market might not be bouncing back as yet but because of these launches, some movement has begun for sure. This is providing prospective buyers the confidence to purchase,” says Anshuman Magazine, chairman and managing director of real estate consulting firm CB Richard Ellis.

In the last three months, DLF has launched a project each in Hyderabad and Bangalore, totalling close to 4,000 units. DLF executive director Rajeev Talwar said that of these, about 500 units have already been sold in the price range of Rs 1,850-1,890 per sq ft. “These prices are lower than prices in 1998,” he said. DLF is expecting sales to improve in the near future.

“They have realised that they cannot sit on idle land and they need to launch at current market prices,” says Mr Magazine. “The good news is that the response has been fairly good considering the current market conditions,” he adds. Unitech, too, has launched a few projects in the last two months. Unitech’s Uniworld Garden II in Gurgaon’s Sector 47 has been launched at Rs 3,250 per sq ft. “What this launch has done is that it has brought down the ticket size by 40-50% in this area,” Unitech’s corporate planning head R Nagaraju said. Mr Nagaraju said that all the 150 units launched in the first phase in Gurgaon were sold out in 12 days. The company has also launched a project in Dadar, Mumbai.

Indiabulls Real Estate launched Centrum Park at Sector 103, Gurgaon recently at a price of Rs 1,950 per sq ft. This is nearly 40% lower than prices in the area last year. Sobha Developers, which was planning a project in the same area in the Rs 3,500-4,000 range, has deferred its project.

Aashiesh Agarwaal, real estate analyst at Edelweiss Capital, feels that it is important for developers to maintain market presence. “It will help them monetise their land assets that are lying idle at the moment.”

What is reassuring is that a lot of people are back window shopping, says Aditi Vijayakar, executive director, residential, Cushman and Wakefield India. Transactions, though, are still slow and people are taking a lot longer to decide. Buyers are still uncertain about the delivery capabilities of developers, as the market has seen a number of projects going beyond deadline in recent times.