The much-awaited correction in residential realty prices in Mumbai may not have been obvious to start with, but now even the bigger developers that are listed at the stock exchanges have started slashing rates.
For instance, Unitech, the second-largest realty player in the country, has launched a residential project in Dadar West, one of the prime locations in the central suburbs. The project is divided into two categories — one with a price range of Rs 9,900 per square feet and the premium range priced at Rs 14,000 per square foot. Interestingly, the market rate in that area of the city is Rs 18,000 per sq ft! Thus, there’s a 45% reduction in prices.
Similarly, the country’s third-largest realtor, Housing Development and Infrastructure Ltd (HDIL), on March 4, launched its residential project in Kurla, adjacent to the redevelopment site of its Mumbai airport rehabilitation project. The project was initially priced at Rs 5,251 per square feet, but the price was raised to Rs 5,351 per square feet by Monday. However, the going price of the area is approximately Rs 7,500-8,000 per square feet — 33% more than HDIL’s offer.
Hari Prakash Pandey, deputy general manager (finance), HDIL, said, “We had launched 756 flats and, at the end of Monday, we have already booked more than 400 apartments.”
“Fund managers are pretty gung-ho owing to the price reduction by one of the largest realty players in the country,” said an analyst with a domestic brokerage. “Most developers in Mumbai are not yet out in the open and have not slashed prices,” the analyst added. This is despite the fact that residential prices in the city have fallen by 10-15% in December and by a further 15% in January.
The situation is similar in Gurgaon (near Delhi), a market that has rarely seen a price correction even after the downturn.
Indiabulls Real Estate, the Mumbai-based player, last week launched its residential project there. It was priced at Rs 1,950 per sq ft, which is much lower than its peer’s rates of Rs 3,100-3,200 per sq ft.
Traditionally, DLF, Parsvnath, the Jaypee Group and other north-based developers have ruled the Gurgaon market. But Indiabulls’ 40% lower pricing has brought them tough competition.
An analyst from a foreign brokerage based out of Mumbai told DNA Money, “Realty players are tapping new markets and bringing in new price cards, which is hitting developers in that market. But today, developers need to sell each and every project to get money in their kitty as debt repayments dates are coming closer.”
Some major players such as Omaxe, Parsvnath and Unitech have had negligible sales in several of their projects in the last quarter. Any money, even through reduced pricing of projects, could help shore up their balance sheets.
Analysts add that after the reduction in prices by the listed players, even the unlisted players would have to follow suit.
Despite the reductions effected, consultants say, developers are still making margins and no one is selling below the replacement price of the property. Thus, there is always scope for further reduction in prices.
