Mumbai developers run for cover, cut property prices

The developer has blinked. Prospective buyers who were waiting for correction in realty prices should rejoice, as city developers have started bringing down property prices by 10% to 30%.

Manohar Shroff, general secretary of the Maharashtra Chambers of Housing Industry, Navi Mumbai, admitted that developers had started reducing property rates to survive in the sluggish market. Higher interest rates, rising inflation and increasing construction costs have not only dampened demand but also investor desire to book and own more flats.

“The aim is to dispose of property that has remained unsold for long,” he said. 

Vimal Shah, managing director of the HubTown Ltd (erstwhile Ackruti City Ltd) said, “The amount of correction differs from project to project, the locations and progress. We are not giving any discount in the ready possession houses.”

Mukesh Patel, managing director of Neelkant Group, who has residential projects at Mulund and Thane, said, “We have decided to bring down the rates in some projects to boost sales. We aren’t the only ones suffering the heat though. Other big city developers have done the same.”

Buyers, obviously, are thrilled. Chandan Lakhani, a Vashi resident, had chosen a property at Palm Beach road in Navi Mumbai two months ago. The developer was quoting Rs11,000 per sq ft. “I had asked Rs8,500, but he wasn’t willing. Then he asked me to deposit a cheque for Rs1 crore to see if I was a genuine buyer. I did, and now, he is ready to accept my rate. If buyers negotiate with developers sincerely, they will lower the rates,” he said.
      
Pankaj Kapoor, managing director of Liases and Foras, the real research firm said, the cash flow in the realty market has dried up in the last two years, and this has spread panic among developers.

"Earlier, the investors were helping developers by pumping enormous amounts of cash in the property market. Now, the investors themselves are in deep financial trouble, as they could not sell the properties they had bought earlier. So, the market is quite tight," he said.

"To run the business and meet the day-to-day demand, developers need huge amounts of cash. They can’t hold the market for a long time, and give in soon. We have said this several times: the buyer must wait, market will come down.”

He added that the survey being conducted by his firm indicated strong market corrections.