Major realty cos to announce new discount schemes

Major realty cos to announce new discount schemes
Economic Times, 01st March 2009, Page 3

With DLF Group, one of the largest property developers in India, slashing prices in micro markets such as Bangalore and Chennai, it seems that other developers too will follow soon.

SundayET has learnt that many A and B grade developers across the country are planning to announce new discount schemes in markets faced with slowdown. Besides, many are also planning to offer interest free instalments to consumers which will help boost falling sales.

This scheme will be different from earlier construction-linked plans. Developers will use it only for new and up-coming projects. How it works is that on a Rs 40 lakh home the developer will ask the consumer to pay Rs 1.5 lakh bi-monthly for 30 months and rest at the time of possession.

Meanwhile, in many projects, the developers are already offering a 15-20% discount on down payment both in the residential and commercial sector. According to a developer, the new strategy includes focus on mid-income housing and execution and completion of existing projects.

Says Ashutosh Limaye, associate director (strategic consulting) Jones Lang LaSalle Meghraj; “DLF has read the market story accurately and has changed shape to fit the vessel. Wherever any company faces the challenges of a highly competitive market, they are now underlining and solidifying their market leadership. At the first level, they are doing so by reducing prices in the Bangalore and Chennai markets.

“At the second level — and as an added USP — they are offering to pay back to the buyer the differential, if prices should sink further before the project is sold out. This is a brilliant strategy that will overcome a significant portion of a buyer’s misgivings about investing now when the rates could sink even further later on. These are some of the adaptability strategies that will define all players who emerge from the current market turmoil in strength.”

The biggest reason for concern for all real estate players is that the number of deals has been few and isolated with barely any property changing hands in both the residential and commercial sector.

Industry sources, in fact, say that across all metros and tier II cities like Greater Noida, Gurgaon, Mohali, Chennai, Indore,Jaipur, Lucknow, Surat and Cochin there has been 80% drop in number of deals in last six months.

Says Rajeev Rai, veep, Assotech Limited:” We may see price reduction only in those markets where the developer had launched property at a level much above the market absorption cost or the sum total of his input costs.”

Besides the above mentioned measures the developers might also come up with more freebies with the discounts. Says Rohtas Goel, president, Naredco & CMD, Omaxe Group; “Today’s smart buyer knows his needs and he enters the real estate market only after doing thorough market analysis.”