Developers have been howling form the rooftops for a government bailout, but most of them are unwilling to take the first step and scale down rates. In Mumbai,despite being in financial hot waters, they are unwilling to make housingaffordable. Realty sector analysts say this is because developers have formed a cartel to the detriment of prospective customers. Posing as home buyers, enquiries were made at 18 prime properties in Mumbai, National Capital Region of Delhi and Bangalore.
The story that emerges is that builders in the south and the north are offering price cuts of between 10% and 20%, but those in Mumbai are not ready to budge an inch. An analyst with aforeign brokerage, who requested anonymity since he is not authorized to speak,blamed the situation on cartelization. “Without reducing their card rates, they ran to the government for a bailout. Not a single developer has said he has cut prices. The fact is developers are unable to sell flats and have huge loans to repay. This needs to be cleared this year itself and banks are not ready togive any extension on repayments. Reducing property rates will mean their ability to repay banks gets reduced, which is why they are weary of cutting prices.
He may not be far off the mark. Of the 10 properties surveyed in Mumbai not a single developer was willing to offer a discount. Even on projects where possession would be only after November 2009, there was no room for bargaining. Nirmal Lifestyle was offering a discount a mere 1 % on a flat costing Rs. 76lakh The sales officer at Orbit Corporation, which focuses on redevelopment of dilapidated buildings, said the going rate for Orbit Arya, a project on Napean Sea Road, is Rs.60,0601- per square feet. “We havealready reduced the price from Rs 72,000 three months back,” the official said, claiming seven of 11 flats have been sold.
Some time back, real estate analyst had warned buyers not to put money into under- construction project since realtors were facing a severe financial crunch. “It’s almost as if developers are talking advantage of the situation-if you don’t invest in under construction projects, there will be no reduction in the prices of ready flats,” said an industry source. But the north and the south have a different story.
Companies such as DLF, Unitech,Parsvanath, Omaxe and Raheja Developers are all offering a minimum 9% to a maximum17% in places such as Gurgaon and Noida on upfront payments with room for furthernegotiations. Most of these apartments are large, between 1,600 sq ft and 3,000 sqft. Unitech’s ambitious project in Noida, Unitech Grande, which was expected to generate a revenue of Rs 15,000 crore, has excellent discount offers. The sales officer said there is 15% discount on up front payments from flats costing Rs 2-3 crore; “We can negotiate further,” the official said.
That’s twice the discount Unitech’s competitors are offering for similar projects Need for strict norms for builders and real estate agents. The necessity of licensingthe builders and real estate agents has assumed alarming roportions in the country. There is 100 percent of India capital, Indian labour and technical expertise in his industry, which is unique in nature. Not only this, it provides the basic necessity of, shelter’ to the people.
The industry is becoming less and less professional as time goes by. Although there is competition among multinational companies and corporate to make it big in the realty sector the standard here is not satisfactory. This is because no qualification is needed to becomea builder or a real estate agent in India. Anyone who possesses some capital, donsthe garb of a builder.
Accountability and supervision for standards of construction are non-existent. The Municipal corporation, Revenue department and most of other govt. agencies are rife with corruption. Estate agents fare the worst in professionalism. The job of estate agent is being carried on as a source of additional income by a large number of people especially among watchman, security guards, gardeners, site supervisors, society clerks, postmen and petty shop keeper. The reason for this is that no license from the Government/Municipality is needed for undertaking this job. This is a job without investment or with small investment.
The Estate agents now-a- days demand a minimum of 2% of the sale consideration as their commission, as compared with the earlier practice of accepting a small amount given by the pur chaser/vendor as a gesture for the service rendered by the agents in bring the vendor and the purchaser to a common platform. Ifestablished estate agents and builders are to have a safe future the industryshould strengthen its position as a united industry.