Are discounts from real estate majors inevitable?

Sulekha.com

With the financial costs becoming dearer for the real estate developers across the country especially after the Repo rate hike by the RBI and the fall in the sales figures, the developers are finally relenting by offering potential buyers with huge discounts. This is especially in view of the upcoming festive season, where traditionally sales are expected to do well relative to other parts of the year.  The demand has also fallen significantly after the RBI hike that was almost immediately passed on to the end users by many banks, including public and private sector. Many experts also feel that the ball is now in the developers’ court and they must be ready to capture the momentum. Incidentally, the Confederation of Real Estate Associations of India (CREDAI) has recently estimated that the number of projects that have come up now are only 10% of the figures for the same time period last year. This gives the realtors a window to market their inventories and is expected to lead to a windfall in the prices with one developer competing with the other. About a fifth of the total annual sales in the year are done during the festive season and with such a drastic changeover in markets this year, the same target may not be within reach. The real estate industry has been beset by problems that have been coming from all the possible quarters. They include the current economic crisis, abnormal inflation levels and not to mention the unemployment rates in the country. All these problems have constantly plagued the industry from time to time. The recent hike in the rates only added fuel to the fire. It is estimated that the residential market prices have gone down in most of the cities across the country. The reduction in the prices seems to be the only choice for the developers to do away with the existing stock. Many of them have also dropped plans for new projects until such time when the existing and completed ones are successfully sold off. They are also of the view that the rate hike was unnecessary in view of the state of the industry. In some cases, the realtors are going so far as to modify the plans of the existing projects in order to make them more attractive keeping the current trends in mind as also the investor sentiments. Although there has been a lot of theory written on the subject, the actual effect of the rate hike will be felt only in the long term and it is too early to come to any conclusion as of now.