Good time to buy a property
At last, there might be good news for property buyers. Various pressure points such as the depreciation of rupee along with the higher value of capital which has been adversely affecting the cash flow situation of businesses and importers have created an urgency to liquidate assets, which in turn has prepared the property bubble to soon be deflated.
While the rupee depreciation is generally being perceived as playing a major benefactive role towards the NRI community, NRI investors feel it as a burden, as the depreciation of rupee has eroded the value of NRI investments within India by almost twenty per cent in dollar terms.
With all these taking place, the realty market has neared its tipping point and now appears ready for amendments. Presently, with the market showing a bearish trend and projects moving slowly the number of transactions is on the decline.
Cut to the previous scenario, it was replete with rising property values, which have all been artificially escalated and not owing to end user demand. As per eminent realty experts, property prices are highly inflated within India and do not make much sense from an investment point of view.
However, the overarching economic recession is holding sway even on the ‘holding capacity‘ of speculators. Finally, the much awaited rationalization of prices are being witnessed. South Delhi is down by 25 per cent. The construction of builder flats, which were flourishing in south and west Delhi, has stalled work due to absence of the investor buyer.
Numerous developers raised capital at twenty to thirty per cent interest rates, and with a weak uptake of assets, these developers are being forced to liquidate at comparably lower prices, since they are required to pay for the high rate of interest on the borrowed money. Therefore, the downward pressure on builder flats has already begun and is expected to only increase. Non-commitment to big ticket decisions is also attributed to reasons such as increase within circle rates ranging from 100 to 300 per cent depending upon the colony.
As a result, the market rate per square yard is below than the circle rate. Besides, levying of service tax and stoppage of power of attorney (PoA) deals has further added around four per cent to the apartments cost.
When the liquidity of developers is impacted, they dole out huge discounts to customers. Realty projects across India are witnessing a discounting trend, in resale market and original bookings alike. Almost all the new launches are taking place at significantly lower price points and a case of selective discounting is also prevailing.
In the name of distress sale, numerous opportunities for discounted prices are being presented to property buyers. Distress sale is defined as the sale of a property at a value which is fifteen to twenty per cent below its market value.
Lodha Builders gave a massive discount in its Blue Moon project, by pricing the project at Rs 25,000 per square feet. This translated in the sale of more than 500 flats within three days. India bulls has regularly been offering discounts in their golf project located in Panvel, addition in some cases it is also providing a waiver on clubhouse parking, which add up to a discount of eighteen per cent. Indiabulls, in their other project called Sky Terraces, has even waived off the floor-rise charges in addition to offering slow and flexi-payment schemes like 20:80.
