Developers to slash property prices by up to 15 percentNovember 21st, 2008 - 8:26 pm ICT by IANS
New Delhi, Nov 21 (IANS) It seems that the realty froth is finally settling down. After holding property prices for a long time, developers across the country agreed Friday to cut prices by up to another 15 percent. Property prices across the country have seen a correction by 20 to 40 percent, Rohtash Goel, chairman Omaxe Developers and president of the National Real Estate Development Council (Naredco) told reporters here.
“We are asking our members to reduce rates. The reduction will be up to 5 percent for existing projects, 10 percent on new projects and 15 percent for the affordable housing section,” Goel told reporters.
“However, there will be further discount for the customers who are paying on time,” Goel said.
“Developers do not have enough cushions for further price reduction as the cost of lending has gone up considerably. Also the price of cement and steel has gone up,” he added.
Most of the big developers like DLF and Emaar MGF Land, the Indian unit of the Middle East’s largest real estate developer, are also cutting prices to revive demand.
“We are in favour of reducing prices. Because of the demand and supply situation, prices are automatically going down,” said DLF chairman K.P. Singh. “Demand is much less than supply, which is driving prices down.”
As per a forecast by global investment banking and securities firm Goldman Sachs, prices of some property in India will drop 30 percent in the coming days.
Even the prices of premium products, which cost over Rs.3,000 per square feet, will be lowered by at least 10 percent.
Interestingly, the rate cut announcement came just two days after the industry had said Finance Minister P. Chidambaram’s plea for lowering realty rates was “unrealistic”.
The finance minister Tuesday asked developers to cut the prices to tackle the slowdown.
Even Credai - the Confederation of Real Estate Developers Associations of India - Wednesday urged developers to slash prices given the general slowdown in the economy.