DLF mulls apartment resale to refund buyers

DLF mulls apartment resale to refund buyers
Business Standard, April 16, 2009, Page 3

Neeraj Thakur / New Delhi

DLF, the country’s largest property developer, may retrade its apartments at New Town Heights, Gurgaon, and Garden City, Chennai, at a discount. This is to refund buyers who want to exit the projects, according to a senior company official.

“We are not sure at what price the re-selling of the apartments will take place. It may happen at the current price. It is also likely that we will have to reduce our prices further,” said the official.

DLF, in a recent letter to its New Town Heights customers, said, “Refunds to the members will be available only after DLF is able to ‘retrade’ the property, or earliest by six months if the company fails to sell the property.”

Over 550 customers at the two projects have asked the company to return their money. Most customers have paid 40 per cent of the total cost of their apartments.

The company official said many of the people looking for refunds were investors, not end-users. “It is not the delay in start of the construction work that is troubling these customers.They want their money back as the lock-in period of one year in the project is over,” he added.

The company expects the total number of customers looking for refunds to come down to 100-125. It will charge a penalty for returning the money. “The customers had entered into a three-year contract with us. If we have to sell the apartments at a discounted rate, the customers who are backing out should make up for it,” the official added.

“If the company tries to re-sell its apartments in the open market, it will have to reduce prices by a further 10-15 per cent. The new buyers know the expected supply is more than demand,” said Rupesh Sankhe, equity analyst, Centrum Broking.

DLF Garden City, launched in January 2008, has around 3,493 apartments, while New Town Heights, launched in March last year, has around 3,300 apartments.

The company has already slashed the prices of other projects in Bangalore, Chennai and Gurgaon by 10-20 per cent to keep restive customers.