Mumbai's developers may be devising ways to cash in on desperation of buyers, who have been endlessly waiting for signs of a price correction.
Leading developers in the city seem to have kick-started easing of property prices with around 10-15 percent lower price tags for luxury projects in central Mumbai, an Economic Times report pointed out this morning.
Lodha's Blue Moon project in Worli managed to garner over 1,300 applications worth Rs 6,000 crore from prospective buyers, against 750 units launched in phase by pricing its project at Rs 23,000-25,000 a square foot against the ongoing market rate of Rs 28,000 a sq ft. It took an IPO-like approach to sell the project, holding road shows and inviting prospective customers to bid for the apartments within a pre-determined price band, to be allotted on a first-come, first-served basis.
Even IndiaBulls Real Estate is luring buyers with an all-inclusive price of Rs 25,000 per sq ft at Sky Forest. The price is inclusive of floor rise charges for preferred view, and a 20:80 financing scheme which allows the customer to pay only 20 percent at the time of booking and the remaining at the time of possession.
Nirmal Lifestyle, which is offering luxury 2BHKs at a starting price of Rs 1,4 crore in Mulund is offering free stamp duty and registration for early birds.
However, such offers are being launched only in the pre-construction period, when prices are generally offered at a discount to the market rate.
"Such offers are deceptive because most builders have now started increasing the loading charges for super-built up area. Hence the buyer will ultimately have to pay a higher price. These are just schemes to lure buyers because at such high price points in prime areas, absorption is very low and builders are under immense pressure," said Pankaj Kapoor, MD at real estate consultancy firm Liases Foras.
"What rankles many property buyers is the fact that the developer charges them on the basis of super built-up area – this includes the carpet and built-up area as well as the area taken up by common spaces like the staircase, lobby, lifts and even the terrace and building maintenance room," says Ashutosh Limaye, Head – Real Estate Intelligence Service, Jones Lang LaSalle India.
The developer adds facilities (read common spaces) that the law does not require him to. He adds these spaces because they enhance ambience to his project. For example, the law requires a residential building to have only one parking place for a certain number of flats. However, almost all prospective buyers in a metropolitan city would own cars, so the developer provides more than what the law requires. He offloads the enhanced cost on his clients, definitely charging them for more than they are getting.
About 84 percent of the projects in Mumbai and its suburbs that were presented at the property exhibition this month were priced at over Rs 8 crore, and most of the remaining at over Rs 1 crore. “With developers not officially trimming quoted prices across projects; investors (and not actual home buyers) will continue to account for the bulk of sales across new launches,” it said.
So even though a price correction is imminent, it has not yet begun.