A handful of leading developers have hiked the rates at their ongoing projects by 10-20% in the past fortnight, even as others are holding on to their prices despite the adverse market conditions.
The interest rate is rising; sales volumes and registrations are dwindling; home buyers are running shy; and just when everyone expects builders to drop prices, they go and do just the opposite.
A handful of leading developers have hiked the rates at their ongoing projects by 10-20% in the past fortnight, even as others are holding on to their prices despite the adverse market conditions.
At Haware’s Tilak Nagar site, the going rate is being hiked every second month, as the project nears completion. After starting booking at Rs8,000 per sq ft in March this year and increasing it to Rs10,000 in May, Haware hiked the rate to Rs12,000 psf last week.
“There is a huge shortage of flats in Mumbai, and pricing is a secondary factor for the home buyer. As far as the increase in rates is concerned, it is a result of increasing input costs and overheads,” says Suresh Haware, managing director, Haware Group, adding that the labour cost has doubled in the past few months.
Niranjan Hiranandani of the Hiranandani Group says: “The project price is structured on the basis of varying factors like land cost, construction cost, infrastructure cost, etc. In any case, dropping prices is no guarantee that the buyers will buy.” At Hiranandani’s Rodas Enclave project in Thane, the rate has been hiked from Rs7,675 to Rs8,700 psf, not including the floor rise of Rs87 for every floor.
The trend of firming prices is visible not only in Mumbai and Thane but also in other neighbouring locations like Navi Mumbai, Kalyan-Dombivli and Vasai-Virar.
“Good quality apartments in prime areas are in high demand and always command a premium,” says Devang Trivedi, managing director, Progressive Group, adding that both genuine buyers and investors are flush with funds and always willing to pay a premium. On its part, Progressive has hiked the rates at all its projects in Navi Mumbai by 10-15% in the past one month.
Industry observers feel that the move is also a strategic one to break the current stalemate. “For instance, BMC’s new DCR rules that govern FSI premium have not even been drawn and developers are already talking about the prices of houses shooting up by 20%.
The idea is to create a sense of panic among home buyers who have been patiently waiting for prices to rationalise and, once the buyers blink, the builders can go ahead and roll out another round of hike in real-estate prices,” says a senior partner at an MNC consultancy.
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