Treading on the corrective path

Written by Preeti Parashar | Updated: Jun 28 2009, 06:21am hrs
In an effort to pump up the demand for various real estate projects, developers across India are tempting the customers with aplenty offers. From luxury cars to flats, from foreign trips to buy-back guarantees, developers are turning innovative in offering freebies to woo buyers. Real estate analysts feel that higher discounts and more freebies are the first phase of a correction looming over the property sector.

Bangalore-based Orange Properties is offering additional property free on purchase of one. Earlier, they offered one flat free and now it has been extended to two free flats on purchase of one. They also offered Maruti SX4 free for every 1,500 ft2 flat at Bannerghatta in the Silicon City. The group had offered an Audi A4 worth Rs 30 lakh to buyers who booked a villa at its upcoming Magnolia Brooksville project in the past. The villa was on offer at a down payment of Rs 10 lakh. Another company is offering the customers to pay initial amount and get the possession of property. Subsequently the company rents it out and deducts the installment from the rental amount, says Krishna Prasad, a real estate consultant from TPS worldwide, Bangalore.

Bags are full

The customers seem to be in a win-win situation with the realty developers ready to offer more specifications at the same price, such as providing additional parking space and fully furnished apartment. Delhi-based Collage group, which is developing a residential project exclusively for the NRIs in Amritsar, has come up with such an initiative. Vivek Srivastava, Director, Collage Group says, The downturn has made us think on the lines of adding value to the product offered. Without reducing the prices we increased the specifications in the same amount. Now we are offering fully air conditioned apartments with modular kitchen, LCD in living room, wooden flooring, bathrooms with top of the line fittings and wooden cupboards among other offerings. All this at a price range of Rs 26-28 lakh for two bedroom apartment. The group has also introduced special pricing for the armed forces, which is Rs 600 ft2 discount on the price.

The developers in Ahmedabad dont want to be left behind and are also joining the freebie race. Hitesh Shah from Space Management Limited, Ahmedabad says, Besides the free offerings, developers are shifting to offering discounts on the price. About 20-25% discounts are being offered at an average price of Rs 2,500-3,500 ft2.

Some developers offering discounts include Goyal and Company, Safal engineers, Pacifica group, Nishant constructions etc, all coming up with residential projects in the range of Rs 50 crore to

Rs 500 crore. Even affordable housing is becoming a hot favourite with the developers setting up foot in south Bhopal on the outskirts of the city.

CHD Developers has recently launched various special offers such as Property Value Assured and 12 month assured returns on commercial properties at its commercial project, CHD Plaza at CHD City in Karnal, Haryana. CHD extends unique investment protection shield to all its investors, wherein it will bear the complete differential loss in case the price is less at the time of sale. Under the assured returns scheme, the company is offering a guaranteed return of 12% per annum on the buying price for 24 months. Another scheme called the Double Benefit Plan, waives off the EDC and IDC (External and Infrastructure Development Charges) on buying plots in CHD City, which adds up to a massive discount of Rs 13,20,000.

Cutting costs

Besides the offers companies are also focusing on cutting costs to benefit the customers. Sources in Jones Lang LaSalle Meghraj, Mumbai say that with the retail and residential prices seeing a correction of 40-45% and 15-25% respectively, the market scenario has changed. Developers like Akruti, Rahejas etc are offering discounts in cash as well as in agreement charges. Rather than the customer, the developers are bearing these charges. Many have reduced their carpet size in terms of shifting to one-two bedroom apartments from three-four bedroom apartments. They are also offering prices reduced by 35-40% as compared to the prices six months back, says a JLLM official.

Business in mind

To economise the projects, developers are extending areas, downsizing heights and hence reducing costs. Omaxe Constructions is also focusing on optimising the cost by 5-7% in each project. We are coming up with new concepts like G+2 ie three-storey apartments rather than developing multi-storey buildings. Such a project is coming up in Bhiwadi and Indore is next. Further we are working on developing pre-cast structures, which is expected to reduce the construction costs by upto Rs 100 per ft2. Moreover, in Ludhiana, we are introducing service apartments in Omaxe Royal Residency, says an Omaxe official.

Kolkata-based Rajesh Kumar from Somani Realtors says, Market here is still below the break-even point hence the demand is higher than the supply. To help the buyer the companies are taking responsibility of arranging the finance, addressing the processing needs among other offerings.

Corrective action

To make up for the delay, ATS Infrastructure has offered various options to its investors at its Golf Meadows Prelude in Dera Bassi in Punjab. It has given two options to the buyers to receive an interest of 6.5% (of the apartment cost) per annum at the time of possession or accept additional facilities like wardrobes in all bedrooms, VHM panels in all windows, a four-burner hob and a chimney and cloth hangers and lights in all balconies.

In Baddi, Himachal Pradesh many developers have applied for converting their present luxury housing projects to studio apartment projects in lieu of missing buyers. Studio apartments are in demand here as the companies rent them out to their employees. So the developers are shifting focus towards these. We have dedicated two blocks out of the total 23 in our residential project to studio apartments and have applied to develop more blocks in the same category, says SK Bajaj of Shakun Infrastructure Development, Baddi.

With the real estate market turning into a buyers market, developers are leaving no stone unturned to attract the customers with new schemes and offers. Are you ready to get your share of the pie

Whats on offing

Assured 12% return on buying price for 24 months

Luxury cars, free flats

Fully furnished apartment, additional parking at same price

Discounts on the buying price

Special pricing for armed forces