Builders won’t budge, but realty investors are wilting

Brokers told to sell flats at 20-25% less, but even that is too high for the buyers

In a clear sign of the softening real estate market, property investors are inundating brokers to sell their flats at 20-25% discounted rate than the builder rates. Though the number of such flats in the market may not be more than 100, brokers say this scenario is different from the one that existed eight months ago, wherein sellers refused to negotiate the rates.

 Prakash Ahuja of Prakash Estate Agency, Andheri, said that he has the mandate to sell four to five investor-held flats, “Investors want to get out as builders are taking time to complete their projects. They do not want their liquidity to get stuck. However, the prospective buyers aren’t keen to buy at the discounted rate because the price is still high.’’

Despite the flat owner dropping the rate from Rs1.35 crore to Rs1.10 crore, Ahuja has been unable to find a buyer for a 1,000 sq ft apartment at Dharti building in Versova.
Similarly, a spacious garden facing apartment of 1,500-sq ft plus terrace at Versova is also up for grabs. The owner is now willing to accept a bid of about Rs1.75 crore from Rs2.25 crore, his earlier asking price.

 “Although in Thane, the investors may be selling their flats at prices 10-15% lesser than the builder rate, the discounted rate actually comes to over 20% if one adds the transfer charge the investor would have to pay the builder and the estate agent’s brokerage.

However, we recommend buyers to wait as the rates may correct by another 10-15% in the next few months,’’ said Mahesh Ahuja of Aruba Homes Pvt Ltd.

A Bandra-based broker said that he sold a 3BHK flat on 15th road, Khar, for Rs18,000 to Rs19,000 per sq ft. “There are two other investor-held flats in the same building at Khar. Since they have the financial capacity, the owners are insistent on getting Rs22,000 per sq ft. Considering the number of calls I get from investors wanting to sell their flats, the question is for how long will the market sustain at this rate?’’ he said.

Brokers pointed out that most of these flats are located in areas like Goregaon to Kandivili, Thane, and Navi Mumbai where there is large scale construction.

Investors at a residential project on Nagardas road at Andheri (East), which is being developed by a reputed Vile Parle-based builder, are willing to sell their stake at Rs8,000 per sq ft as against the builder rate of Rs10-12,000. Investors of a defunct textile mill being developed by a South Mumbai-based textile-baron-turned-construction-magnate are willing to sell at Rs20,000 per sq ft as against the market rate of Rs 25,000 per sq ft.

Similarly, owners of a property behind R-mall at Mulund  are willing to sell at Rs7,000 as against the builder rate of Rs8,000.

 “This is just the start. Though the demand has fallen by almost 60%, developers are refusing to reduce their rate. But they have started to face liquidity crisis,’’ said the managing director of foreign venture capital fund.