Realtors Cut Prices to Bring Back Buyers Builders such as Lodha Group, Godrej Properties offer discounts to prop up home sales in a dull market

Builders have begun to bring down prices to prop up home sales in an abysmally dull property market, gladdening the hearts of potential buyers. About a month ago, Mumbai builder Lodha Group, which had bought DLF's Lower Parel land last year, and launched a luxury project on the site, sold its entire inventory in ten days by pricing these apartments at an 18% discount to the prevailing market rate. In all, 750 . 3.5 crore-. 6.75 crore homes were sold like hotcakes. 

Another Mumbai builder Godrej Properties tried a similar trick in Delhi's upcoming real estate hotspot — the Dwarka-Manesar expressway. It sold all its 700 apartments on the launch day, when projects all around it were still chasing buyers. 
"It's all about finding the right price point," says Anshuman Magazine, chairman & MD, CBRE South Asia. "In our main cities, real estate prices are much higher than they should be and real prices should be lower," he adds. But all that is changing for now. And it is the big builders who are taking the lead in cities around the country, forcing others to rethink. 
L&T Realty launched Emerald Isle in Mumbai's lakeside Powai area at . 15,500 per sq ft creating a flutter in the area where the market rate is over . 17,000 per sq ft. Nirman Realtors & Developers launched its project at Malad at a 20% discount for bulk buyers and sold most of its inventory. On the Dwarka-Manesar Expressway, Emaar MGF sold 250 units in its project Gurgaon Greens in just a week this January by aggressively pricing it at . 6,000 per sq ft while other projects were priced at . 7,000 per sq ft. 
On the same stretch, Adani Realty, which launched its first project in the NCR region, launched 500 apartments, which got oversubscribed by three times within three days, says Tarwinder Singh, CEO. 
"Several builders are driving volumes through disruptive pricing," says Abhay Khemka, owner, Khemka Investments & Properties, a real estate brokerage firm in Gurgaon. "This is the right pricing. We are expecting others to follow suit." 
In Bangalore, where sales in most projects are usually gradual, Provident Housing saw about half its stock of 548 apartments in a newlylaunched property Provident Harmony being snapped up in 10 days as the developer brought down the overall ticket size by reducing the size of the apartments. 
"There is a new requirement from buyers, which is about the right size and right price. Many builders make the mistake of launching larger size apartments, making it unaffordable for buyers. We decided to stick to certain profitability (factors) by pricing them lower than competition," says Jackbastian K Nazareth, CEO of Puravankara Projects, the parent company of Provident Housing. 
Lodha, which bought the NTC mill land in Lower Parel from DLF for . 2,725 crore last year, got 1,300 applications for the 750 apartments it had launched in the project codenamed Blue Moon. "We wanted to challenge the convention in south Mumbai by offering luxury residences here at ticket sizes up to 50% lower than those currently available," says Abhisheck Lodha, MD, Lodha Group. 
Home sales across the country have lagged in the last few quarters because of the overall negative market environment, accentuated by high property prices in many locations. Homebuyers have been sitting on the fence, waiting for property prices to correct and that put developers in a spot of bother. This has pushed up the level of unsold home inventory across the country dramatically to 602 million sq ft at the end of the December quarter, which would take up to 29 months to be sold at the current pace of absorption. 
"Mumbai and NCR have been facing a problem of high prices for a number of quarters but now even other more affordable markets like Pune and Bangalore are heading in that direction. Sometimes, greed takes precedenceover efficiency impacting both the consumer sentiment and productivity of the developer," says Pankaj Kapoor, MD, Liases Foras, a non-brokerage real estate research firm. 
In the past few months, though, many developers across the country have reduced prices. The move has led to better take-off in sales. "This shows that pricing was the main concern of homebuyers," says Lalit Kumar Jain, national president of the Confederation of Real Estate Developers Associations of India. Jain's company Kumar Urban Development launched a township project KUL Nation where it sold 400 apartments in a week, with pricing that was 10-15% lower than competition. Noida Extension is another location where pricing has played a big role in reviving sales. Even after the land issues faced by the area, homebuyers have flocked here. "Prices here are much lower than Noida, which is just a stone's throw away," says Shiv Priya, ED at Amrapali Developers. 
The trick, says Ashish Jerath, vicepresident, sales at Emaar MGF, is to find the sweet spot in terms of pricing and ticket size if you have to sell large numbers quickly. What also worked in Emaar MGF's favour was the fact that the company launched smallersized apartments compared to other projects in the vicinity, reducing the ticket size, just like Provident Housing did in Bangalore. 
ravi.sharma@timesgroup.com