DLF reduces rates in south, others likely to follow suit
Chennai, B’lore Projects Get Cheaper; Old Customers To Benefit Too Sanjeev Choudhary NEW DELHI COUNTRY’S largest real estate developer DLF has cut its prices in its on-going projects in Chennai and Bangalore by 20-30%, and has extended this benefit also to those customers who had earlier bought homes in these projects. Existing customers, who have paid more than the revised apartment price, will be eligible for refund, although there may not be many such cases, as most have made only part payment, the company said. DLF’s decision, which international property consultancy firm DTZ described as “bold”, is likely to force other realty companies to bring down prices. DLF may also bring down prices of its projects in other cities as well, a company official said. DLF’s move is similar to what country’s largest bank — State Bank of India — did in the home loan and auto loan market. The SBI has slashed home loan rate to 8% for all new borrowers for the first year of the loan term, fuelling a turf war with private sector mortgage lenders. But unlike DLF, the bank didn’t extend this facility to its existing customers. DLF has revised it prices downward by 17% to Rs 2,650/sqft in its Gardencity DLF OMR project in Chennai, comprising 3,500 apartments, of which 2,000 have already been sold. The company has slashed prices by 32% to Rs 1,850/sqft in Bangalore’s Bannerghatta Road. The Bangalore project has a total of around 2,000 apartments. The company also recently launched a housing project in Hyderabad at Rs 1,850/sqft, which is substantially lower than the market price. A DLF spokesperson said the company’s decision to reduce prices was in response to the changed conditions in the real estate sector due to unprecedented global events and changes in the raw materials costs. DLF’s latest move is in line with the thoughts expressed by its vice chairman Rajiv Singh at the quarterly earnings announcement almost a month ago. He had said that the property prices would fall by 15-20%. He had also highlighted the need to take the lead and quickly turn in products that are required in the current market. “By the time one gets ready with products, the business cycle has already turned and there are not many takers for such products,” he had said. Several analysts have been saying a 30-35% decline in prices was essential to spur demand for property. Customers, wary of high property prices and finance cost, and uncertainties regarding their own future due to poor job market scenario, slid into the wait and watch mode late in the second half of last year. As sales dried up, credit became expensive and private equity funds vanished, property firms faced major pressure on their cash flow. Developers though have been slow in reacting to the market changes. DLF’s latest decision to cut price can potentially influence the entire market. “DLF’s bold move will prompt other companies as well to reduce prices,” said DTZ India CEO Anshul Jain. sanjeev.choudhary @timesgroup.com --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en -~----------~----~----~----~------~----~------~--~---
