In the last week, advertisements posted by developers and real estate marketing agencies show discounts as high as 50 per cent available on the market rate.
The city’s real estate market has corrected prices and this is now visible in sales pitches. In the last week, advertisements posted by developers and real estate marketing agencies show discounts as high as 50 per cent available on the market rate.
Experts say that developers have now realised that for them to survive, they have to behave according to the market which needs a correction in prices. They also claim that such price correction has never happened in the history of real estate. Many attribute it to the newly implemented Acts like RERA, Goods and Services Tax (GST) Act and demonetization.
A recent advertisement by Sai Estate boldly announced up to 50 per cent off on two of its projects. They attributed the correction to RERA and GST. When contacted, Amit Wadhwani, director, Sai Estate Consultant, said, “Our ideology has been to provide value homes at discounted prices for 365 days and 12 months of the year. We work only with those developers who understand that there has been an ordinary correction after demonetization, RERA and GST, as inventories are piled up in the city since a year.”
Meanwhile, there are several other developers who are also offering similar discounts and there are plenty examples of slashed real estate prices in the city (see box). According to Rajesh Vardhan, managing director, Vardhman Group, the real estate market has been slow for quite some time which developers have also realised hence they are passing on practical discounts to homebuyers. “Buyers believe that GST will add 12 per cent more to the flat’s cost which means the flat prices go further up. Buyers do not want to feel this burden and builders want to sell. Hence they are passing on direct discounts to homebuyers,” said Vardhan.
It is no secret that the real estate market has been sluggish for the longest period, and developers have waited a long time for it to catch speed. However, recent developments also forced buyers to keep their purse strings tight rather than invest in a property. GST, for example, has been one such drawback. To woo homebuyers, many builders have even dropped GST completely while some are offering concessions — which means they are willing to absorb the burden of GST.
According to Manohar Shroff, vice president, MCHI-CREDAI’s Navi Mumbai Unit, there are many developers in Mumbai Metropolitan Region who are asking homebuyers to pay only five to six per cent GST instead of 12 per cent. “In Navi Mumbai there are developers who are absorbing up to six per cent of GST. In Mumbai there are developers who have zero per cent GST and in Pune up to 9 per cent GST is being absorbed by developers. This is being done so that homebuyers do not feel the burden and don’t leave the market,” said Shroff.
Dr Sanjay Chaturvedi, a real estate expert, said, “Such price correction where developers are offering savings up to Rs 1 crore has never happened in the history of real estate. Builders have to accept the fact that only after they adhere to the market condition will they be able to attract buyers. The market’s demands are clear — buyers will come in only if property prices are reduced and hence developers have started reducing the prices of flats.”
According to a recent report by Jones Lang LaSalle, an international property consultancy firm, that analysed the MahaRERA registrations, the unsold inventory of 1, 2, and 3BHK homes in Mumbai has remained almost the same. While there is a 49 per cent unsold inventory of 1BHK homes, for 2 and 3BHKs it is 50 and 51 per cent respectively.
This huge stock of unsold inventory is another reason that experts claim for prices going down. “There are many ready-to-move apartments which haven’t found takers and they have been lying vacant for two to three years now. Developers have to offload this stock too or else the inventory will keep piling up,” said an expert.
Rera in action
14,000 and more projects have been registered with MahaRERA since May 1, 2017
1,400 and more complaints have been registered with MahaRERA via their email id about projects that need to be registered but haven’t yet
26 cases disposed of by MahaRERA up to September 29, 2017
3 or more orders are passed by MahaRERA daily on an average
Rs 1 crore amount the authority recently asked a developer to deposit with the housing society for conveyance
Rs 15,000 the monthly rent that MahaRERA recently asked a developer to pay to a homebuyer if the developer doesn’t complete the building on time
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