There is good news for the property buyers; it is finally competition time in the property market today, as builders/developers have started competing with each other in placing their pricing policy. Several builders are seen slashing their prices in locations where there is abundant supply and a dearth of buyers. This trend is mostly visible in the suburbs and far suburbs but the signs are clear that a lot of builders are cutting prices to be the first ones to encash on the deal which comes out. And this direction seems very healthy for the buyer or consumer as he is getting the benefit of the competition in the market, which earlier was only seen in the opposite manner, as to whose prices are higher.
The builders have finally realized the value of the client and a transaction and the sales team in builders’ offices are getting reasonable with their approach towards buyers in terms of flexibility to an extent of extended payment schedules, waiver of floor rises, reasonable car parking charges compared to the price of the car.
Mayfair Housing cut its prices in Virar after Rustomjee aggressively launched their project and also Lodha launched its project Lodha Univis at the fag end of Ghodbunder Road in Thane at an inviting price of Rs 2997 per sq ft which is fair for that location considering the amenities given in the project. This project makes sense today as it in good proximity to both the Thane and Borivali side. Builders have also started mentioning cheapest deals and best prices in ads, which is inviting to an extent. If the builders remain flexible there is a lot of business to be done as buyers are actually waiting for markets to stabilize in the next six months and see where it goes down till as they are in no hurry and they are presently keeping a low profile and staying put where they are.
Similarly, many builders have reduced prices in the north Mumbai belt owing to marginal sales till the end of 2008. With market and financial conditions still not improving the buyer is still in the same mode of wait and watch and in the next few weeks will determine the progress of the market and we would know where it shapes. In Navi Mumbai there is a phenomenon competition in locations like Kharghar (above 200 projects) and Kamothe (above 120) etc. where the supply outstrips the demand manifold.
There is a little twist in the story here now. The competition is not restricted to builders any more, the investors who have invested through the year 2005/6 and 7 respectively are now realizing that the markets will not move upwards for another 18-24 months period till this cycle of downturn and then stabilization does not happen. Of course, it is highly unpredictable where the tide will take us, considering the current economic slowdown and other political uncertainties. So, the best option for him will be sell and exit at a price far lesser than the builder and he will still make enough money on his investment considering that the market has already corrected by 10-20% across different location and he had bought at cheap rates. But builders are asking for very hefty transfer money, which is not usual and putting terms and conditions that make it difficult for the investor to exit. The builders’ stand in this matter is that since he has his own stock to sell at higher price and if they allow the investors to exit at lower prices then, of course, the rates which are established in their large townships are affected and they have to book in higher loss compared to the single investor.
Investor usually invest in the property market to earn money and there are only two ways of doing so at least in real estate, the first one being the capital appreciation and one can make only money when you recycle the transaction after a few years of investment, pay the required short term capital gain and exit. In the current market situation the investor is happier to pay tax as the opportunity in the financial markets are higher today, be it in fixed term deposits earnings a better yield or be it in stock with a high risk but a promised return in couple of years which unfortunately real estate des not offer.
The second way is the lease rent option, but with economic conditions becoming slower, the lease rentals returns are plummeting to a low of 3 to 5 % and that too the yield is possible with a little bit of hard selling.