CHENNAI: The beginnings of what promises to be a price correction in home real estate appear on listing portals as property developers take to discounts on the per sq ft rate and freebies to get a dragging Chennai market back on its feet.
In March, property portal Indiaproperty.com curated a campaign that saw the participation of a wide range of builders including Nirmal Lifestyle, Wave Infratech, Brigade Group, Nitish Estates, VBHC, Salapuria Sattva Group, Indiabulls, Malles Constructions, Navin’s, Arun Excello, Ramky group, Jain Housing and others who had offered a flat discount anywhere between Rs 900 per sq ft per 100 and home.
IndiaProperty, a Chennai-based company listing over seven lakh properties on its website, offers a diverse set of services for anyone scouting for a property – from getting realty experts to comment on price trends to package called assisted buying, in which a documentation expert does the due diligence for the customer before purchase.
“Most of the new projects are launched with competitive pricing to attract buyers. For instance the developer would not charge for floor rise, give parking free of cost, a per sq ft discount or will not charge for the view. Basically , developers are not lowering their prices on paper, but are offering discounts and freebies,” says Ganesh Vasudevan, CEO of IndiaProperty .com.
Price cutting is getting more apparent along the city’s IT corridor, where high investor participation and inventory build-up has begun to put pressure on developers to get cracking on monetising their investments. “The trend of price revision is not region specific but more prominent on the outskirts like the Old Mahabalipuram Road. If we analyse the top localities in Chen nai for the past two quarters, all those pockets along the once popular OMR corridor are missing,” said Vasudevan.
For real estate developers, such analyses brought forth by online portals provide valuable advice on which properties to discount and where to funnel their marketing spends. Sankara Srinivasan, founder-director, Realtycompass, says patterns are gleaned from the purchase preferences of over 6,000 people who visit his portal every day.
“Now, the contest between portals is about generating leads for a project. But we are focussing now is to give developers ideas as to where their next project can be, or what amenities, say a swimming pool or a spa, are preferred at a certain location,” he added.
This extra push to woo buyers comes after nearly two years of oversupply of homes in the city. Developers are also under pressure to on the financial front with cost of funding varying anywhere between 16 to 24 per cent.
“FDI funding come with an Internal Rate of Return of around 24 per cent. Although institutional funding such as from banks comes cheaper, not all developers have access to such funds,” said R Kumar, MD of Navin’s.
Source : The Economic Times, Jun 18, 2015