Freebies fail to attract home buyers

Home buyers appear to be waiting for a ‘crash’ in realty prices. Offers such as, waiver of stamp duty and registration charges, free lifestyle home or modular kitchen and free parking, have failed to boost home sales.

Unless developers are willing to reduce prices by at least 25-40% to affordable levels, home buyers are likely to stay away. This was the message emanating from a four-day property exhibition organized by the Maharashtra Chamber of Housing Industry (MCHI) at the Bandra-Kurla complex despite the huge response.

“We are highly encouraged by the overwhelming response to the exhibition. The attendance of quality home seekers on all four days and their interest in the property shows the rising demand for housing in Mumbai and the state,” said Pravin Doshi, president of MCHI.

However, it does not seem that the response was matched by conversions. Although 800 properties by 85 real estate developers were put up for sale and 15 housing finance companies were also on hand to provide funding, it is estimated that the conversion rate was below 10%. It must be kept in mind that such exhibitions are not really the point of sales for something personal like a home.

The gloomy state of the sector is quite apparent. For genuine home buyers, there was the possibility of further negotiation at the site office of the project. An analysis of the under construction or newly-launched projects shows that the majority of supply is likely to come from Mulund, Thane, Navi Mumbai and Bandra to Borivali.

In addition to the above deals, there were more inducements like Sunil Mantri Realty offering Rs 100 per square feet discount on one of their projects. Vinay Unique Constructions was giving away a 10-gm gold coin and Kohinoor City was offering a waiver on club membership and floor rise as well.

Despite these baits, affordability continues to be the main concern. It was observed that flats with an area of 550-800 square feet and costing Rs 35-60 lakh saw huge customer interest.

In the wake of a rise in interest rates, subvention on home loan rates was a new discount offer made by developers like Mayfair Housing, Ekta World and the Dosti group. Under the offer, the customer pays a low fixed interest rate of 8.75% for a fixed tenure of two to three years, while the balance interest is borne by the developer.

One Comment

  1. Posted October 30, 2008 at 3:55 am | Permalink

    No Developer offers discount below the base cost, which includes the cost of land and construction. However, developers do offer value-additions and incentives to prospective buyers to speed up the willingness to buy. When looked at closely, these incentives do not have any significant monetary value. It’s observed in a falling real estate market, small developers start with such practices before going for distress sale. It’s also noticed that most of these practices are adopted by Dubai-based developers. For luxury apartments in the Middle East, developers tie up with car companies or offer other such discounts. Most of the products bundled with the house are either phased out or in the process being phased out.For more view-

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